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After sending the School System’s budget back to the Board of Education and getting it back with no additional adjustments, the Finance Committee has approved the county’s funding for 2024 with a proposed 12-cent tax increase.

The committee agreed on June 1 to forward the budget to the full County Commission to consider later this month.

The budget was sent back to the School Board on May 23 following a move by the Finance Committee to further reduce the county’s maintenance-of-effort revenue commitment due to declining school enrollment.

Director of Schools Stanley Bean was the only Finance Committee member to vote against the issue.

Changing the maintenance-of-effort commitment meant that the School Board had to reconsider its budget, which it did with no further changes from what the Finance Committee had wanted.

If the commission approves the budget as is, the property taxes on a $100,000 home in Franklin County areas outside city limits will increase $30 annually from $467.50 to $497.50.

The average home value in Franklin County is $230,000, meaning the taxes on that assessment would increase by $69 annually, from $1,075.25 to $1,144.25.

Franklin County’s cities have a lower tax rate than the outside areas because municipal governments provide some of the services the county normally offers to rural residents, but the county tax rate for those communities will also increase by 12 cents.

 Commissioner David Eldridge, a Finance Committee member, told fellow committee members on May 23 that the county’s maintenance of effort to the School System’s stands at $19.2 million of the system’s $54.1 million proposed budget for the upcoming fiscal year.

He added that the maintenance-of-effort requirements could be reduced because student numbers have been declining, which is allowed according to state law.

He said later that the system’s overall enrollment has declined by more than 1,000 students from 5,689 in 2010 to 4,673 during this academic year.

Tennessee’s maintenance-of-effort laws ensure that local funds budgeted for schools do not decrease as state funding for schools increases. County commissions, city councils, and special school districts must budget at least the same total dollars for schools that they did the previous year to comply with maintenance-of-effort laws.

However, Eldridge said the county’s maintenance-of-effort level could be reduced because of the lower student enrollment.

The bottom line is that the School System’s fund balance, reserve funds left over from the previous budget cycle to be used for unforeseen expenditures, would be reduced, and Eldridge said the money could be used on the county government side which has also been facing a budget battle.

The move is the second step recommended by Eldridge to reduce the School System’s maintenance-of-effort level.

The Finance Committee previously approved to reduce the system’s fund-balance estimate from $10.1 million to $9.8 million after Eldridge said it could be reduced by $300,000 to stave off a potential property tax increase.

The School System has also approved spending $1.5 million for a new roof on Clark Memorial Elementary School, setting the fund balance at $8.3 million.

Estimates are that the county’s maintenance-of-effort requirement could be reduced to $18.5 million, depending on what the state Board of Education determines, meaning the School System’s fund balance would be reduced by another $700,000, setting it at about $7.6 million.

Eldridge said that even with the fund balance being reduced to $7.6 million, the School System is in the best financial shape it’s ever been.

He said the school budget includes a 10 percent cost-of-living increase for certified and support staff and includes a 5 percent health-insurance increase to go into effect in January 2024.

The budget also includes giving bus contractors a 10 percent increase above their base pay, plus a 5 percent increase on mileage reimbursements and 5 percent on the compensation they receive for the number of bus seats they have to transport students.

“They’ve been given everything they’ve asked for,” he said about the School Board, adding that the remaining fund balance still leaves the system in strong financial shape.

However, Bean told the Finance Committee on June 1 that decreasing the School System’s fund balance creates a slippery slope because the system is facing another major roofing project at Huntland School that could include upgrades on several buildings.

School Board members have also cited a goal to keep teacher salaries at an increasing level because the School System has fallen behind other nearby systems in pay scale and has lost quality teachers who moved on to garner higher compensation. They’ve said that continuing with that objective would place the reserve funds in further jeopardy.

School Board Member Lance Williams voted against sending the school budget back to the Finance Committee without further revisions.

He said the School System will have about $734,000 less to operate on annually.

 “At the end of the day, we’re still $734,000 short of where we were a couple of weeks ago,” Williams said, adding that, at that rate, the reserve funds will be depleted to dangerously low levels in several years.

He recommended a $130,000 bus purchase be delayed this year and said the board could also consider not filling two vacant guidance-counselor positions as a means to start cutting the deficit.

However, after an hour and a half of discussion, the board opted to accept the Finance Committee’s recommendation. Although Williams was the only School Board member to vote against the issue, Sara Liechty abstained from voting on the issue.

The Finance Committee adopted a move in April to include anticipated sales tax growth in balancing the county’s budget. At that time, Bean again was the only Finance Committee member to vote against the motion.

According to the move, which will go before the County Commission as part of the budget process, 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.

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.