Much to its dismay, the Board of Education has approved to forward its 2014-15 budget to the Franklin County Commission with no additional revenue requested, leaving great concern about how bad the financial picture will be next year.
The Franklin County Finance Committee recently denied the Board of Education’s previous 7-cent property tax increase request, and that left the board and its chairman, Kevin Caroland, pondering what they fear will be needed to balance the system’s budget next year — potentially painful cuts or even school being closed under a State of Tennessee mandate.
The committee recently approved, in a 4-1 vote, to send the school system’s budget request back to the Board of Education to determine its budget without the additional revenue.
Voting against the funding request were committee members Eddie Clark, John Woodall, Sue Hill and David Eldridge.
Dr. Rebecca Sharber, the school system’s director and a Finance Committee member, cast the only vote to keep the 7-cent tax increase. Committee member Anthony DeMatteo was absent from the meeting.
The Board of Education followed through Monday by concurring with the Finance Committee’s stance because it was the only option it had, members agreed.
The consensus was that the County Commission won’t budge at all in appropriating more money to the school system this year.
Board member Mike Holmes suggested the board send back the request with a 3½-cent property tax increase as a compromise but other board members agreed the Finance Committee will probably remain steadfast about not increasing revenue to the school system.
Caroland summed up his thoughts.
“It is our obligation to assume we’re not going to get any more money,” he said. “We asked for half of what we need, and we’re not getting it.”
Caroland said the lack of funding only creates a worse financial scenario for the school system.’
He said the 7-cent tax increase would maintain a positive financial direction. Without it, a deeper financial hole is being dug for next year, meaning it will take a 13-cent tax increase to make ends meet, he added.
Cindy Latham, Franklin County deputy director of finance, said recently that the school system budget totals $42.39 million, and 3 percent of that amount — $1.271 million — is required by the Tennessee Department of Education to be held in reserve status to meet state budget requirements.
Caroland recently said depleting the savings account to $1.27 million leaves little headroom to take care of any major expenses that the system may face.
He had referred to a roof at Sewanee Elementary School that required about $500,000 to fix last year. He added that money was used and hasn’t been replaced, and if the board were to have something go wrong on a larger scale, the fund balance could be completely eroded away, leaving the system in a bad financial bind.
“It’s just not a good place to be,” Caroland had said.
He said the Finance Committee, in essence is forcing the school system to live with the state minimum $1.27 million. However, County Commission has a $4 million reserve fund balance, plus the taxing ability to raise revenue if needed.
“We can’t do that,” Caroland said, referring to the Board of Education being able to generate its own revenue. “We’re dependent on (the County Commission) to get more money.”
The ideal reserve fund number, according to school board members, would be $3 million.
However, an option the board was looking at to reach that number would have involved a 33-cent tax increase — an $82.50 annual property tax increase on a $100,000 home, or $6.87 added to a monthly mortgage escrow account payment.
Instead, the 7-cent tax increase would have cost an additional $17.50 annually — $1.45 monthly — upping the current $667.50 property tax bill on a $100,000 home to $685.
Caroland said the school system has had to continually dip into its reserve funds to balance its budget, and the clock to continue doing that has run out of time.
The board discussed Monday about potentially cutting insurance contributions and returning Franklin County High School’s class structure from a “block schedule” to seven periods a day, which could reduce the required teaching staff.
However, members agreed both suggestions would not be in the school system’s best interests and decided to accord with the Finance Committee’s wishes in hopes the full County Commission will approve additional funding next year.
Caroland said he doesn’t like the situation.
“If we need $1.1 million next year, they don’t have to fund it,” he said.
Board members said without the additional funding next year, the state Board of Education might not approve the system’s budget, which would prohibit school from opening.
Board member Chris Guess motioned to approve the budget without the 7-cent property tax increase. His move was seconded by Betty Jo Drummond.
The board concurred in a 6-1-1 vote with Caroland in opposition and Chris McDonough abstaining.
Drummond said she believes the commission will come through with the necessary funding next year.
“I have faith in the commission. … I really do,” she said.
“This means we’re really close to not opening school,” he said. “I don’t share Betty Jo’s faith in the County Commission.”
Caroland questioned recently why the Finance Committee didn’t approve forwarding the request to the full County Commission to consider.
“They always do that,” he said. “The County Commission should have at least had the chance to consider this.”
He reiterated his position to the board again on Monday
Clark had told the Finance Committee he feels the property tax increase request is premature and isn’t necessary at this time.
“In my opinion we don’t increase taxes to increase fund balances that are not needed yet,” he said. “We might have to do it next year, but I don’t think we should do it yet.”