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Schools: District will freeze spending after revenue shortfall
By Charles Swenson
A $632,000 shortfall last year was only 1.5 percent of the local tax revenue collected for the Georgetown County School District, but it has the potential to put a large dent in its plans to renovate and expand facilities.
While the district’s spending was also under budget in the fiscal year that ended June 30, 2016, it had to draw $538,000 from its reserves, leaving it just at the $10 million balance it has told credit rating firms it will maintain. A $165 million bond issue approved by voters in November was based on the ability of the district to borrow at low interest rates.
Because it based it’s current budget on last year’s estimates, it faces a similar shortfall that will put the reserve below $10 million.
“Before we issue any bonds, the $500,000 will be back” in the reserve fund, Superintendent Randy Dozier said. He hopes the district will be able to start about $20 million worth of capital projects this summer.
The shortfall in property taxes in fiscal 2016 was the result of property reassessment that saw values drop 2.5 percent. The reassessment is required by state law every five years. The results didn’t arrive until October 2015, four months after the budget was adopted. Georgetown County increased its tax rate to make up the difference. The school district did not.
“The board made the decision not to raise taxes,” Dozier said. “They made the right decision.”
The district didn’t find out about the shortfall in local revenue until its annual audit was completed last month. Lisa Johnson, the district finance director, said the revenue was even less than anticipated because there were appeals and abatements by the county. “It takes some time for those folks to step up,” she said.
Johnson was also told that there was an increase in the number of property owners who received residential assessments. Commercial property and second homes are assessed at 6 percent of their market value. Owner-occupied homes are assessed at 4 percent. In addition, under state law, owner-occupied homes are exempt from property taxes for school operations. They still pay taxes for debt service.
The school district’s debt service fund has a $6 million surplus, Dozier said. That money can’t be used for operations, but with the capital improvement project about to get under way it’s possible some high-paid employees could take on roles that would allow them to be paid from the debt service fund, he said.
“If it was only two people, it would close the gap,” Dozier said.
The district has been interviewing firms to manage its capital improvement projects. Dozier is also looking at the cost of managing the projects in-house. He expects to have a recommendation for the school board within the month. The project manager would help determine the order and timetable of the improvements.
In the meantime, the district will freeze some spending to prevent another deficit in this year’s budget. There are still some vacancies in non-teaching positions that haven’t been filled, Johnson said.
One of those is for an assistant director of information technology, a $120,000 position when benefits are included. The school board agreed to add the position this year in part because the capital improvement plan includes $20 million for technology.
“I feel confident we can make up the $500,000 by July 1,” Dozier said. “We’ve already identified about half of it.”
Although the school board could raise taxes, Board Member Richard Kerr agreed the spending cuts are preferable to a tax increase. “I think there is a way to get there,” he said.
But Kerr also pointed out that the board hasn’t seen a financial report since the budget was passed in June.
Dozier isn’t sure that would have made a difference. “The last report we did, it looked like we were on track.” But he said the district needs to have more discussions with Georgetown County about revenue trends.
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