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Board of Education OKs budget, uncertainty remains regarding revenue, deficit

By Brad Hicks

Although the Unicoi County Board of Education does not yet have the answer to the lingering question of just how much revenue Unicoi County Schools will receive in the upcoming fiscal year, a looming deadline to ensure the receipt of state funding forced the board to take action last week.

The board unanimously approved the school system’s general purpose budget for the 2017-18 fiscal year during a brief special-called meeting held Tuesday, May 30. The overall 2017-18 budget for Unicoi County Schools is $21,930,101. The original budget for the 2016-17 fiscal year reflected both revenues and expenditures in the amount of $23,804,277.

“We know it was a very difficult budget year with another round of cuts,” Unicoi County Director of Schools John English said to the board during last week’s meeting. “I appreciate your work over the last couple of months working through this, talking through some different possibilities.”

The unavoidable uncertainty surrounding 2017-18 revenues had been discussed at meetings leading up to last Tuesday’s session. To make sure their system receives state Basic Education Program funding, school boards must pass their system’s new fiscal year budget by June 1. However, final BEP estimates and other projected revenues needed to paint a clearer budgetary picture are often unavailable until after early June. The new fiscal year begins on July 1.

This is the situation the Unicoi County Board of Education found itself in with the 2017-18 fiscal year budget for Unicoi County Schools. Still, revenues totaling $21,930,101 are projected in the budget approved last week by the county’s school board. State education funding makes up the bulk of a school system’s funding, and that figure is currently projected at more than $13.7 million for Unicoi County Schools in 2017-18.

But English said this number could change in either direction between now and the end of June. The county schools system began receiving Basic Education Program, or BEP, funding estimates from the state in April. From April to May, the system saw its estimated share of state funding increase around $17,000, English said.

The system has not yet received its BEP estimate for June, but English said local school officials hope to see another increase in the funding when that final estimate arrives. However, he warned the June BEP estimate could contain a funding decrease.

BEP is the formula used to figure out how much revenue the state will provide to a school system each year, as well as the revenue local governments need to provide as a match. Student enrollment is the primary determiner of funds.

Like surrounding school systems, student enrollment in Unicoi County Schools has decreased in recent years, a trend English attributed to a lack of jobs within the county, increased homeschooling, online education options and families having fewer children. This enrollment decrease has negatively impacted the system’s BEP funding. In the 2016-17 fiscal year, the school system experienced a loss in BEP funding in the $500,000 range.

Schools systems equate BEP funding losses to the number of positions the decreases represent.

“For example, we’ve been cut 17 teacher positions in the last two years,” English said following last Tuesday’s meeting. “We have absorbed some positions. We’re very mindful in trying to keep – and this is the way we put it always – as many people working as we can. We know job loss in this county has been difficult for a lot of folks, but the truth is what we’ve been able to do as we’ve had retirements and as we’ve had people maybe move to other systems, we’ve been able to shift within and not fill those positions. A lot of the savings you’ve seen have been from people moving. But, no question, we’ve had to take a hard look at some cuts and some positions where, maybe three years ago, we had enough students to justify those positions but now we don’t.”

This is not the only funding cut Unicoi County Schools is facing in 2017-18. The system could lose around $105,000 in federal Title I money. These federal dollars have previously been used by the schools system to fund state-mandated Response to Intervention positions. Although English said lawmakers are working to see that this funding is restored and have provided positive feedback that it will be, Unicoi County Schools has, for now, picked up the RTI positions in its general purpose budget.

Another key revenue piece not yet determined is how much funding the Unicoi County Schools system will receive from Unicoi County. The school system receives a share of both sales taxes and property taxes collected locally. The county does not yet have its anticipated sales tax revenues for the upcoming year, and the value of each penny on the county’s property tax rate will not be determined until mid-June in what is a reappraisal year. Once the penny’s value has been determined, county officials can use the figure to set Unicoi County’s 2017-18 property tax rate which, in turn, will allow them to estimate property tax revenues for the upcoming budget year.

More than $4 million in revenue from local taxes is projected in the schools system’s budget approved last week.

Local school officials worked prior to last week’s meeting to whittle down a more than $800,000 deficit Unicoi County Schools was facing. As English explained, this projected deficit stemmed from revenue uncertainty, but officials were able to trim $394,000 from the figure thereby reducing the amount the system would need to pull from its reserves in order to balance the 2017-18 budget.

The moves made to accomplish this $394,000 in deficit cuts included the elimination of bus monitors originally included in the 2017-18 budget. This saved the system around $97,000. A library assistant position and guidance position at Temple Hill Elementary School and a custodial position at Unicoi Elementary School were also eliminated. An English as a Second Language (ESL) teacher currently in the system will be moved into the spot previously occupied by a retiring Special Education teacher, lowering the salary and benefit costs associated with the post. Two UC Advance assistant salaries have also been eliminated from the original budget, as one of the assistants voluntarily resigned to complete student teaching and the other position will be picked up by IDEA – SPED.

“So we just absorbed some positions within the budget with some retirements and some personnel moves,” English said.

With the more than $390,000 in cuts, the system’s deficit entering 2017-18 currently stands at $447,564. If nothing changes, this is the amount the system would need to pull from its reserves – which currently sit at around $2 million – in order to balance the budget. But English said he expects a decrease in that deficit total as projected revenues begin to roll in.

“So that number will look better, we just don’t know how much better,” English said. “But between now and July 1, a lot of that will play out and we’ll have some concrete end-of-year numbers.” 

English also said school officials will continue to keep an eye on personnel moves throughout the summer, assessing whether it is necessary to fill positions opened due to retirements and looking at internal shifts that could be made to further trim the deficit. If the Title I funding is restored, that money would also reduce the deficit.

By law, a school system must maintain at least 3 percent of its annual budget in reserves. English said, ideally, system officials would rather see reserve funding used for capital projects than toward recurring costs such as salaries and insurance.

Questions over the system’s financial situation have prompted the Unicoi County Board of Education to delay a decision regarding school system employee insurance until the budget situation shakes out further.

Unicoi County Schools is on the state’s health insurance plan. Officials were previously made aware that costs on that plan are set to increase in the future. Some plan options could see costs increase by around 7 percent, while one option could possibly realize a 23 percent increase. 

The school board met in a work session on May 17 to review and discuss possible insurance options. At present, the school system currently covers the entire premiums for employees on single coverage and this amount plus 45 percent for those on family plans.

The possibility of having the system cover a fixed percentage of the premium costs was discussed during that work session, as were other options. But, by the end of the meeting, the board decided to go ahead and consider approval of the budget prior to the June 1 deadline and revisit the employee insurance matter prior to October’s open enrollment.

“We want to wait until we see what all those final numbers are before we make that decision,” English said.

The 2017-18 budget, however, does include a 2 percent pay increase for school system employees. Officials previously said this bump would help offset insurance cost increases should they occur.

“I know on behalf of the employees they appreciate the fact that, even though we’ve taken the cuts that we’ve taken, that you’re very mindful of the job they do, and I know in all the discussions with you it all centers back around to trying to take care of our employees,” English said to the board during last week’s meeting. “I know in speaking to them at the end of the year they’re very appreciative of that and they do recognize your efforts there, so I want to say ‘Thank you’ for keeping them at the forefront of your thoughts. I’m proud that we’re able to do a 2 percent increase with the budget that we have.”

Around 78 percent of the system’s budget is made up of personnel salary and benefit costs. The remainder, English said, is comprised of expenses such as electricity, fuel and supplies.

Even though the budget has now been approved, English said school officials will continue with the wait and see approach on revenues, as the bottom line could change significantly over the coming weeks.

“Every year, if you go back and look at our budgets, we’ve had to take money from reserves to balance it,” English said. “This year’s no different, but the fact that it’s not going to be $447,000, I think we all are glad of because that’s a lot of money. It’s hard to predict exactly where that’s going to land, but it could land another $200,000, $250,000 less than that, which would make all of our days, but what the penny brings, property tax, sales tax, when all that revenue comes in, then we’ll have a clearer picture.”