Finance Committee picture

County Mayor David Alexander, from left, discusses school budget issues with Finance Director Andrea Smith and Finance Committee Members David Eldridge, Barbara Finney and Johnny Woodall.

County mayor asks for 20-percent reduction

The Finance Committee has rejected the school system’s budget a second time, citing that if further cuts aren’t made this year, Franklin County could be faced with another high tax increase two years in a row.

County officials have said that building two new middle schools, jail construction cost overages and other expenditures could result in a 20- to 21-cent property tax increase this upcoming budget year to make financial ends meet.

A 21-cent property tax increase would cost $52.50 annually on a $100,000 home or add $4.37 to a monthly mortgage.

The committee held a special meeting Wednesday to address the school system and the jail project’s budgets, and concern was expressed by several members that if the school system’s budget isn’t reduced this year, a subsequent tax increase would be required next year.

Franklin County Mayor David Alexander, a committee member, said he would not accept facing a tax increase next year when cutbacks in the school budget this year could prevent future expenditures from getting out of hand.

The committee agreed to have Alexander and Committee Member David Eldridge meet with School Board Chair CleiJo Walker and Director of Schools Stanley Bean to consider budget cuts.

The committee initially rejected the school system’s $47.04 million budget request, and the Board of Education reduced the amount by $310,592 to $46.72 million by making cutbacks some board members say could be detrimental if permanently left in place.

Citing the budget could be reduced much further, the committee voted down the measure in a 5-2 vote with Alexander, Eldridge, Carolyn Montoye-Wiseman, Johnny Woodall and Barbara Finney in opposition while Bean and Scottie Riddle were in favor.

Alexander recommended the budget be cut across-the-board and mentioned 20 percent as a target percentage to cut away.

“You’ve got to start someplace,” he said, emphasizing that if the same approaches continue toward balancing the school system’s budget, a tax increase would be required to have the system maintain its reserve-fund levels.

Reserve funds are used to pay for unexpected expenditures, such as unforeseen capital building projects. Reserve funds have also been used by school systems to meet payroll obligations when tax collections have come up short.

Bean said that the system is in a position where it would have to dip down to dangerously low reserve-fund levels anyway which it would be doing with the system’s second budget draft that the committee rejected. He added that the school system could get by financially during the upcoming school year, but it would be another story next year.

Bean asked whether the Finance Committee’s role in the process could be bypassed, giving the full 16-member County Commission an opportunity to consider the system’s budget request.

He said later that four commissioners have made a decision against the school system’s budget that the full commission might approve.

He stressed that cutting the budget by 20 percent would fail to meet annual maintenance of effort obligations that accounted for $44.67 million last year. A 20-percent cutback from that figure would be $8.93 million, leaving the school system with $35.74 million to operate on.

Tennessee maintenance of effort laws require that school systems cannot receive less revenue than they did the previous year unless boards of education agree to receive less.

The school system could meet its budget requirements by expending $2.4 million of its $4.6 million reserve-fund total.

However, that would leave the system with only $2.2 million going into the next fiscal year’s budget.

The situation would spell a $200,000 shortfall if the 2020-21 expenditures were at $47.04 million with no additional funds being appropriated by the county.

Eldridge said expenditures could be cut, but he disagreed with Alexander, saying that across-the-board reductions could inevitably result in unintended reductions to vital programs or personnel.

The school system’s budget lists that it would be receiving $15.9 million from Franklin County property taxes and about $700,000 coming from licensing fees and other local sources.

The system receives $28.1 million from the state of Tennessee with most of the money provided through the state’s Basic Education Program.

The system also receives $172,000 from the federal government, setting the combined revenue at $44.67 million — $2.37 million shy of the $47.04 million initial request.

Bean said cutbacks would have to be targeted at personnel, programs and equipment.

Main cuts in the second budget draft involved one regular teaching position being reduced in the revised request, saving $52,000 in salary and benefits from the initial $13.64 million system-wide total for regular teacher salaries.

The special education program also would be losing a teacher position, cutting $39,460 from the initial $1,802,584 program salary total.

Contracted services were reduced by $27,400, from $104,312 to $76,912.

Instructional supplies were reduced by $20,000 to $332,404.

Bean said the situation would probably result in teachers paying for some of their supplies out of their own pockets.

Board Member Sara Liechty said this week that it’s a tragic situation when the school system reaches a point where it is underfunding its educational programs.

Other areas, such as travel expenditures, were also reduced in the second budget request. 

Board Member Chris Guess said the school system has received no new regular system operating money from the County Commission since 2012. He added that the situation has gone on too long, and the educational program could ultimately suffer if the pattern continues.

“We can’t solve this by taking a razor blade to the budget,” Guess said, adding that the school system has no way to generate its own revenue and is dependent upon the County Commission to meet its financial obligations.

Cindy Latham, deputy director of finance, said that, despite the cutbacks in the second budget draft, the school system could meet payroll obligations in the interim between receiving state Basic Education Program funds and when it receives county appropriations from property tax collections.

However, she said the future paints a different picture.

“After this year, it’s a whole different ballgame,” Latham said.

Eldridge and Alexander expressed concern that the school system has established a pattern where it expends more than it needs to, and if the trend continues, it will require huge property tax increases to fund operations.

Eldridge said the system has lost 426 students in the past five years, and he deemed the system’s expenditures should have been reduced accordingly.