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Local News

March 31, 2010

School board decides not to propose tax rate increase

Board members split 2-4 on taxes. 2010-11 budget proposal goes to public hearing April 13 with no option to raise tax rate

CENTERVILLE — Appanoose County residents don't have to worry about a tax rate increase from the Centerville School Board.

Although the school system is facing a general fund deficit of $530,185 at the end of this year due to losing more than $700,000 in the middle of the year from Gov. Culver's 10 percent across the board budget cut, the board's final budget will not include a proposed tax increase.

Six of the seven board members were on hand to okay a proposed budget for publication during the March 23 meeting. Business manager, Dr. Marvin Judkins, prepared two budgets, one without a tax rate increase and one with a 3.75 percent rate increase. The current overall tax rate is $17.58821 per $1,000 of valuation. The new proposed tax rate would have been $18.23075 per $1,000 of valuation, an increase of $.65 in taxes for every $1,000 valuation of a property.

Board member Marty Braster was in favor of the increase, considering the amount of the deficit facing the school, the fact that the increase was not very large and the fact that the board had slightly lowered taxes for each of the previous five years from $17.75382 in 2005 to the current $17.58821 in 2009.

"I have absolutely no problem with what I consider to be a very, very modest tax increase," said Braster.

With either option, the schools had worked out several ways they would cut expenses during the next year, which will be done regardless of next year's tax rate. Several positions will be left vacant from early retirements in June. A custodian who retired will not be replaced, a junior high math teacher and a high school language arts teacher will not be replaced. Neither fourth grade teacher that retires will be replaced, but one position will be covered by transferring a sixth grade teacher to fourth grade. Two class size reduction teachers will also be transferred to classrooms to fill vacant positions opened by retirements in the elementary schools and their positions will not be filled. Principal’s budgets will be reduced and the transition kindergarten will be eliminated, with five-year-olds merged with the four-year-olds next year. The estimated savings from these decisions will be $527,107.

Judkins laid out this savings plan as well as the estimated added expenses from contracted 2.5 percent salary increases and an anticipated increase in energy costs of about $70,000 for the board to look at when considering the budget. Judkins also gave the board projected cash balances through 2014 for both a 3.75 percent tax increase and no tax increase. With no tax increase the school isn't projected to come out of cash debt until the end of 2013 with a projected cash balance of $212,488 at the end of that year. With the 3.75 percent tax increase, the school would have had a positive cash balance by the end of 2012, ending that year with a balance of $252,488. Both of these projections however, depended on no more unexpected cuts, such as the one that happened this year.

Braster and board member Jeri Pershy agreed that a tax increase was needed, if the school wanted to start making progress on their cash problem. Board member Bill Matkovich voiced fears that voters might get angry if taxes were increased and vote against PPEL, which will be put before the voters for reapproval this September.

“I think if we keep the tax rate the same then we can go to the voters and ask to get PPEL extended and chances are we will get it done, but I think is we raise tax rate up $.75, then when we go to ask for PPEL approval we won’t get it,” said Matkovich.

Though the board thought that might be a legitimate concern, Superintendent Rich Turner reiterated the fact that the school board has been dealing with cash issues for several years and would have had a positive balance of more than $200,000 at the end of this year if not for the across the board cuts.

“The real issue hasn’t been that we haven’t been trying to manage as we go along,” said Turner. “The real issue is that every time we put a plan in place the state comes in and takes that money away from us and then we have to put a new plan in place.”

Judkins agreed.

“Just in two years they’ve cut $860,000,” said Judkins. “If we had that, we’d be sitting probably at $300,000 right now.”

Turner tried to lay out the problems the school runs into every year, with unexpected cuts.

“We look at all these things and we put a plan in place thinking that will get us through maybe a year or two and then all of a sudden the state comes in and takes away the kind of money they did, particularly this year,  and our current plan then is now readjust and regroup and come up with the next plan to get us back to where we are at,” said Turner. “I think what Marvin’s trying to say is we have the option here, is we have to balance property tax to balance our cuts and can it be both a little bit to get us where we need to be.” 

Board member Braster thought it was important to get out of cash debt quickly and build up a cash reserve for times like this past year, when the school faces unexpected cuts and that right now it could be done with a relatively small tax increase and without eliminating any staff.

“We get crushed when the state takes away $750,000,” said Braster. “There’s a reason you’re supposed to have $2 or $3 million dollars in cash reserve. So you can weather those storms.”

Turner agreed that keeping continually refusing  to raise the tax rate and lowering it over the past several years had definitely contributed to the school’s situation.

“I think at least in the years that I have been here the board has tried to protect the tax payer all the way along,” said Turner. “There’s a reason we have this cash problem is because we’ve said we’ll make it up next year and next year and next year.“

Board member Tom Lange was firmly against raising taxes and thought that progress could be made towards getting out of debt even without a tax increase and wanted to look at more cuts.

“I would like not to eliminate positions, but I am definitely not for raising taxes,” said Lange. “I just don’t think it’s conducive to bringing in business, or keeping businesses that we have.”

Although Braster agreed with Lange that the school should look at more ways to  cut expenses and that voters might be angry about a rate increase, he was more worried about the cash deficit.

“We could also not raise and lose PPEL,” said Braster. “I don’t know how we can look at these financial targets and not raise taxes. This is not a big  tax increase. We haven’t had one in years.”

Board President Steve Hoch also felt that the school could make progress towards debt reduction even while holding the tax rate steady for now, although he thought tax rates would still have to go up sometime in the future.

“As long as the state keeps mandating allowable growth and as long as the local tax payers have to shoulder part of that burden, at some point in time there’s no choice, you’ve got to raise taxes,” said Hoch.

Board member Nick Hindley wasn’t totally against a tax increase, but if one was decided on, didn’t like the idea of going over $18. In the end Hindley joined Hoch, Lange and Matkovich in opposing a tax rate increase.

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