Funding formula has school board worried

Mar. 16, 2013 @ 05:15 PM

“This doesn’t pass the smell test,” Board of Education member John Crowder said Friday morning as the school board discussed a new school funding formula favored by county officials. 

The Union County Board of County Commissioners will vote Monday on a funding formula that would give the school system the equivalent of 35.36 cents of current ad valorem tax revenue. County documents project the formula would give the school an additional $1.7 million for the 2014 fiscal year. 

Another option is a percentage-based funding formula where the school system would receive a certain percentage of ad valorem revenues, regardless of the penny value. However, the county staff seem to be leaning toward the penny formula, school board members said. 

“The reason we’re proposing the penny versus the percentage is to protect the schools from future property rate changes,” County Finance Director Jeff Yates said. 

He explained that if there is a percentage and the revenue changes, the school system gets less funding, however, the commissioners can adjust the penny rate with fluctuations.

In the case of a revaluation, the formula will be analyzed and changed to a rate that generates the same amount of revenue as before. 

The 35.36 cents figure came from studying previous school budgets. 

“We took their 2013 budget, what the county was giving to the schools, we took out their cost of deputies that we were paying them to pay us, then we said, okay, if you use 2013 numbers, how much tax rate does it take to generate that number,” Yates explained. 

County staff established a base, converted that base to pennies, then generated the number. 

“It provides them that growth and the theory being as growth occurs, they need more money, Yates said. “That’s no different than anyone else in the world when that comes to funding.”

Yates thinks the formula, which did not exist in the past,

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will make the budgeting process less adversarial and provide the county and the school board with an idea of what they need to prioritize and how much money they will have. 

Crowder was concerned that as the needs of the children and the school system grows, the penny formula would not. He was concerned about emergency expenses and what the school system would do to fund an unforeseen cost. 

Board member Michael Guzman said Crowder’s scenario could happen and the school board could go to the county commissioners for a one-time adjustment or request emergency funding. 

Board member John Collins said he could not remember a time when the board had requested emergency funding and received it, something school staff affirmed. 

Chief Financial Officer Dan Karpinski said the school system has never received additional funding after the county appropriation was given. 

The additional money given by the county last year for teaching assistants was paid back months later.

Yates said, in an interview, that there is a one-time emergency expenditure system in place. However, the would the intent of the formula is that it remain in place for a few years.

“(The) idea is to provide revenue stability,” Yates said. He added that if the formula is constantly changing, there is no stability.  

Many members were concerned with the idea of being locked into a formula for a few years, without knowing what the future would look like with regard to public education and the needs of the school system. 

Chairman Richard Yercheck noted that using a formula would not be a bad thing, as long as the school system receives the money it needs to operate. 

Board member Kevin Stewart agreed that the formula for a baseline for negotiations, since the commissioners will ultimately not vote on a budget until June. 

“I am hearing a lot of confusion,” Stewart said. He added that they were making a heavy policy decision based on something abstract and proposed a joint public meeting with the commissioners to discuss funding.

The commissioners will hear a presentation about the formula and vote at their Monday night meeting.