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Starnes: Hawkins BOE can't count on savings to get out of $4.5 million budget deficit

Jeff Bobo • Jun 27, 2014 at 9:34 AM

ROGERSVILLE — The Hawkins County Board of Education will be spending the next two weeks looking for ways to trim and overall proposed 2014-15 budget deficit of nearly $4.5 million.

Thursday the evening the BOE received the preliminary figures which show deficit of $3.687 million in the general purpose fund, and a deficit of $795,000 in the transportation fund.

Over the previous five fiscal years the BOE has used savings to help balance the budget, to the tune of more than $7.6 million overall.

But, that well is beginning to go dry.

As of the end of the 2011-12 fiscal year Hawkins County Schools has an undesignated fund balance of $11.76 million.

As of the end of this current fiscal year those savings are projected to be down to $5.3 million.

Last year alone the BOE used just shy of $3.7 million in savings to balance the budget.

Tennessee school systems are required to maintain an undesignated fund balance of no less than 3 percent of their overall budget.

Hawkins County's budget, as presented Thursday, requires $54.429 million in spending, which sets the mandatory minimum required undesignated fund balance at a little more than $1.5 million.

Some quick ciphering reveals that the BOE's undesignated fund balance isn't going to cover this year's deficit.

With only 17 days on the job, newly appointed director of schools Steve Starnes has been crunching numbers since being appointed to take over for retiring director Charotte Britton.

Starnes said Thursday the BOE will be faced with some difficult budget decisions this year, and the option of eliminating personnel will have to be considered.

As equally undesirable as layoffs is the prospect of asking the County Commission for a tax increase.

Some of the other possible cuts Starnes presented to the board included utilities, textbooks, fuel, transportation parts and equipment, sports facility upgrades, technology, office supplies, and the reduction of supplies to teachers.

But, those cuts amount to less than $600,000.

Starnes noted that the Hawkins County Commission hasn't approved a tax revenue increase for the school system's general purpose and transportation funds since the 2005-06 fiscal years nine years ago.

"The deficit presented tonight is significant, but I think we're in line with most of the other school systems in the area who are experiencing similar problems," Starnes told the Times-News after the meeting. "We can't continue to balance our budget every year out of the (undesignated) fund balance. We see that it's decreased $5-6 million over the past three years."

Starnes added, "We'll have to make some tough choices and we'll have to identify our priorities. We want to stay away from personnel cuts, but when your budget is 85.5 percent (personnel), after the other suggested cuts that's the only place left to go."

The BOE budget draft is bad news for Hawkins County, but it's also going to be bad news for Rogersville and Kingsport city school systems.

Hawkins County Schools receive $1.05 per $100 of assessed value from county property tax revenue. This past year that revenue was disbursed sending 90 cents to the general purpose fund — which must be shared with the municipal school systems in the county — while 15 cents was sent to transportation, which isn't shared with the cities.

The proposed 2014-15 budget has 75 cents going to the general purpose fund and 30 cents going to transportation. That means Hawkins County will be sending less property tax revenue the cities, although Starnes couldn't say Thursday exactly how much.

Undoubtedly the cities will be able to figure their respective numbers out fairly quickly, especially Rogersville.

Rogersville leaders were outraged last year when the Hawkins County BOE proposed cutting the general purpose appropriation to 68 cents, and increasing transportation to 37 cents.

It would have cost Rogersville a reported $164,177 in county shared revenue; and cost Kingsport $86,994, but the BOE agreed to hold off for a year.

Starnes said the end-game for the tax revenue shift is to continue the trend over the past two years of paying for new school buses without going deeper into debt.

This year the BOE will be purchasing seven new buses, which accounts for about $595,000 of that $795,000 transportation deficit.

But, this year's transportation debt payment will exceed $400,000. Fortunately one of the old bus bonds will be retired this year, and next year's bus debt will be less than half of that.

If everything goes to plan, within a few years there will be no more bus debt, which will be a substantial savings.

"Purchasing buses as we go saves bond fees, it saves interest costs, but we also have to come up with the total cost of the school buses in this year's budget," Starnes said. "That's going to get a little easier in coming years as our debt payment reduces, but we've still got to come up with that money somewhere this year."

The BOE's next regular monthly meeting will be July 10 at 6 p.m.

The board agreed to meet for its next budget workshop at 5 p.m. prior to that meeting.

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