E

County Commissioner David Eldridge is recommending the School System’s fund-balance estimate for the 2023-24 fiscal year be reduced by $300,000 to stave off a potential property tax increase.

Eldridge told the Commission’s School Committee on May 2 that he will be recommending the Finance Committee, which he chairs, reduce the fund-balance estimate from $10.1 million to $9.8 million. The fund balance is reserve money left over from the previous year to be used for unforeseen expenditures.

Eldridge said sales tax proceeds in recent years have increased, and the scenario has left the School System’s fund balance in solid shape.

“I don’t feel like telling the taxpayer who has no savings account that they are going to pay a tax increase when there’s such a fund balance,” he said.

School systems, according to state law, are required to have at least 3 percent of their overall budget in reserve status, meaning Franklin County’s minimum fund balance would be $1.62 million, based on $54.1 million in total expenditures.

However, school leaders have said the system would struggle with the 3 percent figure because it would not be enough to cover major expenditures that are or could be looming over the horizon. The School System has always retained more than the minimum fund balance.

Some Tennessee school systems in the past have harbored minimal fund balances and faced shortfalls, having to borrow money and pay accompanying interest to meet payroll expenditures.

School Board Member Lance Williams aired his stance on Eldridge’s recommendation.

“We understand,” he said to Eldridge. We may not like it, but it’s your decision.”

The Finance Committee adopted a move in April to include anticipated sales tax growth in balancing the county’s budget. Director of Schools Stanley Bean was the only Finance Committee member to vote against the motion.

According to the move, which will go before the County Commission, the 2024 local-option sales tax budget will be increased above the 2023 level to include reasonable anticipated growth while the property tax budget will be equally reduced to offset the local-option sales tax growth.

The county, by law, can’t reduce its local maintenance of effort — which stands at $19.66 million — to the School System.

However, Eldridge said there is some leeway in the process, based on declining school enrollment which the School System is facing.

Eldridge told the Finance Committee on April 6 that the School System has never included anticipated sales tax growth as part of its budget process. He added that the school’s budget has always been set using sales tax figures from the previous year, although receipts have traditionally increased annually.

Eldridge said the additional sales tax revenue the School System has been receiving has increased the annual maintenance of effort required by the county.

He explained the School System’s maintenance of effort includes a combination of local taxes involving property and sales taxes and other fees included in the total.

Eldridge said that since the School System’s budget has not included anticipated sales tax growth at the outset, the school-fund balance has increased annually.

He said that if the anticipated sales tax growth were included in the budget, the property tax amount could be reduced, and the sales tax growth could be used in other areas of the county’s overall budget with the county still complying with the maintenance-of-effort requirement.

“We don’t need to be raising taxes when there’s money there that could have been used up front,” Eldridge said.

He recently said the School System, which received $49.9 million of the county’s $90.8 million in appropriations in the 2023 fiscal year, has seen its fund balance — money left over from the previous budget cycle — increase from $3 million to $11 million in the past five years.

The School System’s proposed budget for the 2023-24 fiscal year includes a 10 percent pay increase but does not request any additional money from the county.

Questions were brought up about School System step increases and how much the overall raises might be for educators who are eligible for the step increases.

Eldridge said some school employees would see overall pay increases of 16 percent with the step increases included.

School Committee Chairman William Anderson said recently that the salary increases, overall, would probably average about 12 percent.

School and county officials said that employee raises in a period of extremely high inflation are paramount.

Linda Foster, the School System’s human resources supervisor, said the raises are necessary.

She explained that neighboring school systems pay teachers more, and Franklin County needs to catch up to stave off losing key personnel.

“If we give 10 percent, we’re better off, but if the others give 10 percent, we’re in the same place,” she said. “We really need the 10 percent.”

Foster went on to say that a goal in the budget toward non-teaching personnel is to ensure that no one is paid less than $14 an hour.

Williams used an example that fast-food restaurants pay $13, and if the School System doesn’t do better than that, it can’t retain employees.

He explained that making cuts in the school budget would be difficult because 77 percent of the budget goes toward employee salaries and benefits.

The School System has 760 employees, including 420 certified as teachers and 340 listed as classified employees who work as educational assistants, custodians and nutritionists.

County Mayor Chris Guess said county government employees are also struggling to handle the effects of inflation and deserve raises.

Anderson also recommended using $500,000 of the School System’s fund balance to go toward debt service because the School System has several buildings that are old and may need to be replaced at some point.