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'That is not sustainable': Proposed 2018-19 Hawkins BOE budget uses $3.3 million in savings

Jeff Bobo • Jun 19, 2018 at 9:00 PM

ROGERSVILLE — In taking approximately 6 cents in property tax revenue from the school system last year to balance the county general fund budget, Hawkins County commissioners knew they would eventually have to replace that school revenue.

Instead, the proposal for 2018-19 is for the county to recall another $345,103 from the school budget, or about 3.46 cents in property tax revenue, due to an enrollment decrease which allows the county commission to roll back its maintenance of effort requirement.

Now the Hawkins County Board of Education is looking down the barrel of a $3.3 million revenue deficit in its proposed 2018-19 general purpose school budget. 

In 2014, the school system received a 12 cent property tax increase.

But if the $345,103 reduction is approved in the 2018-19 budget, that will amount to a cut of almost $1 million in county property tax revenue, or almost 10 of those 12 cents from 2014 being claimed by the county.

That’s revenue that the county general fund pulled from the school system to offset its own budget shortfalls, but now the school system is on the verge of its own budget crisis.

Hawkins County BOE’s revenue deficit 

On Monday, BOE Finance Director Melissa Farmer presented the county commission’s Budget Committee with a grim 2018-19 budget proposal with a $3.3 million revenue deficit, which would be offset by using savings and reserves.

Last year the general purpose school budget for 2017-18 was projected to use $2.3 million in savings.

The good news is, some revenues came in higher than anticipated, and some spending was lower than projected, and Farmer said she expects to use only $555,402 in savings to close out the 2017-18 fiscal year.

As of June 30, the general purpose school budget is expected to have $11.3 million in savings.

The bad news is, the 2018-19 revenue deficit is $3.3 million.

About $150,000 in revenue from the current fiscal year will carry over to the next fiscal year. As a result, the 2018-19 school general fund budget proposes to uses $3.148 million from the unassigned fund balance (savings).

What’s the impact of using so much savings?

Assuming those projections are accurate, the overall unassigned fund balance would drop to $7.869 million as of June 30, 2019.

“Of course, I don’t have to tell you all that is not sustainable,” Farmer told the Budget Committee. “Hopefully that $3.3 million won’t in actuality be $3.3 million when we get to June of 2019. But there’s a good possibility that it could be.”

She added, “I don’t know the answer, but I do know that if the Board of Education’s property tax money continues to be taken from year after year, then general purpose school (fund) is going to be in the same shape the (county) general fund was in last year.”

Other contributing factors

The $3.3 million budget deficit can’t be attributed completely to the county commission funding recalls, however.

BOE Chairman Bob Larkins, who attended Budget Committee meeting, noted that several factors have contributed to the shortfall.

Health insurance premiums increased 2.5 percent, and the BOE had to cover $311,000 of Gov. Haslam’s mandated teacher pay increase, plus another 16 percent for workman’s comp and retirement.

The BOE also proposed a 2 percent pay increase for noncertified employees, as well as a $3 per day increase for school bus drivers.

Then there are building upkeep and increases in “the normal everyday business of trying to maintain the schools,” Larkins said. 

“We had some big capital outlay projects. We’ve got paving, we’ve got roofs, we’ve got plumbing repairs. We’ve got a significant (renovation and roof) job at Keplar.”

What’s the solution?

Larkins said, “The solution is for us to continue to be conservative in our spending. Yet at some point in time, we’re going to have to make some significant investments in our infrastructure and our properties. Otherwise, if you let things go like that they just get worse in trying to make repairs more costly. At some point in time we’re going to have to come back to the county and ask for additional funding.”

The full county commission is scheduled to meet July 6 at 8:30 a.m. for another budget workshop to review a third draft of the proposed county budget as well as the school budget.

Only eight of the of the 21 county commissioners attended Monday afternoon’s school budget presentation, and Budget Committee Chairman Stacy Vaughan told Farmer she should be prepared to answer a lot of questions at the July 6 meeting.


 

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