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Local News

April 4, 2011

School Board proposes tax rate increase to deal with cash issues

The next board meeting will be held at 6:30 p.m. Tuesday, April 12 at the administration building. The public hearing to approve the proposed budget will be held at that time.

CENTERVILLE — The Centerville School Board at their March 22 meeting voted 7-0 to propose a $1.38 property tax rate increase. The proposed increase is the first in several years and the board hopes it will help address ongoing cash issues the school system has faced over the last few years. The tax rate would increase from the current $17.59 per $1,000 of valuation to $18.97 per $1,000 of valuation. In comparison, other Iowa school district property tax rates range from $8.34 to $23.63 with more than 60 percent ranging from $14 to $20.

The school system has faced numerous budget cuts at the state level that have left it with a negative cash balance at the end of the year for several years. Even after early retirements and various other budget cuts were implemented last year, the school year ended with an approximate $250,000 cash deficit. The proposed tax rate increase would raise around $300,000 next year for the cash reserve, which may help wipe out the current cash deficit if the school also implements budget cuts. Even if the full increase is approved at the next board meeting, the school system will still have to cut expenditures in next year‘s budget and may be facing staff layoffs.

Centerville, like other Iowa school districts, has to set a final budget before it knows how much money it will receive from the state. The Iowa Legislature might make a decision by the end of April, but school districts must submit final budgets by April 15. That means many school districts are budgeting for a worst case scenario.

According to business manager, Dr. Marvin Judkins, right now, the state's proposed zero percent increase in allowable growth and the fact that Centerville is part of the budget guarantee due to declining enrollment, mean that more of the school system's budget will have to be paid for through property taxes. The budget guarantee is completely funded through property taxes.

Last year the budget guarantee for Centerville was $194,119. This year if the proposed zero percent allowable growth increase is approved, the budget guarantee would increase to $402,559, an increase of $208,000 that has to be funded through local property taxes. If a two percent allowable growth is approved, the budget guarantee would be $234,787, an increase of $40,000.

The school may also lose approximately $191,000 that in previous year‘s had been used for property tax relief. According to administrator Rob Busch, because of a re-calculation in determining and reporting sales/use taxes, of which a portion in previous years had been put into the Property Tax and Relief Equity Fund, many districts including Centerville could see a substantial loss in property tax relief money. There is currently some proposed legislation that could return money to property tax relief, but as of right now, it has not passed both the House and Senate. The proposed bills are SF 425 and HF 641.

The budget will also decrease by $106,000 next year, just due to declining enrollment. With all of these numbers in mind, and the fact that the board isn’t sure what the state legislature will do, they approved proposing the tax rate increase.

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