When it comes to dealing with a financial reckoning, it can’t be said that the Francis Howell School District didn’t see it coming.
The school district, which has about 17,000 students, has been mulling what to do about its fiscal headaches since the recession started in earnest in 2008. Six years of lowered property values, increased costs, a special use levy expiring, and continued underfunding in state aid have taken a toll on district finances.
After years of budget surpluses, the district found last year that it faced a $22 million budget deficit during its 2015-16 school year starting in August. To help remedy the situation, district voters are being asked to vote on a 90-cent property tax increase – Proposition Y – on the Aug. 4 ballot. The last tax increase voters approved was in 2004. The district’s Board of Education also cut $4.2 million in personnel expenditures – including 39 full-time teaching positions eliminated in a plan approved in January – and $4 million in other expenses.
If approved by a simple majority vote, the tax increase will raise about $20 million for the district. The operating levy for the district is estimated to be $5.2318 per $100 assessed valuation. District officials say the tax increase will cost the average homeowner less than $1 per day.
The district decided to put the increase on the August ballot because, if approved, funds could be available for the coming school year. The district sets its tax rate in September.
But the August ballot decision will be costly. There are only two issues on the August ballot – Prop Y and one in Foristell – meaning the district cannot share the cost of the election with other political subdivisions. Typically the cost charged to subdivisions by the county’s Election Authority is lower because more cities, school districts and other subdivisions place issues on the ballot, sharing the cost. No so in August.
The district’s bill for the August primary election is expected to be “near a quarter of a million dollars,” said County Election Director Richard Chrismer.
“It would have been about $57,000 if it was held in April,” Chrismer said.
He said the authority is trying to reduce expenses for the district by limiting the election to about 35 precincts.
Kevin Supple, the district’s chief financial officer, said did not enter into the decision lightly. A telephone survey of about 400 residents was conducted before staff and the board decided to place the measure on the ballot.
The district’s financial worries started to come to a head at a time when its students were doing well academically. The district scored among the top 10 school districts in the St. Louis area and the top 7 percent in the state. Its three high schools ranked among the top 25 high schools in Missouri by U.S. News and World Report, and student ACT scores were increasing.
But while academics improved, revenue lagged. Property taxes, basic state aid and sales tax account for 88 percent of the district’s revenue. Property taxes, which provide 57 percent of the district’s operating revenue, are calculated based on the assessed value of real and personal property. Since 2009, with reassessment years figured in, the district has had an overall 9 percent decline in total assessed valuation.
Even though the district’s assessed valuation increased this year, revenue growth, regulated by the state constitution, is restricted to either 5 percent or the consumer price index. The county auditor determined the CPI at 0.8 percent, compared to 1.5 percent CPI in previous years.
“We finally see an increase in assessed valuation and the CPI is half,” Supple said.
Another factor is the loss of a 20-cent special purpose levy that had expired. In 2004, district voters approved an 89-cent tax increase to its property tax rate. Twenty cents was deemed a special purpose levy with a five-year sunset provision that was extended by voters in 2008 for another five years. Last year was the first year the district couldn’t assess the special purpose levy, which cut $4 million in property tax revenue.
While sales tax revenues may be rising due to an improving economy, district officials still say the district may be underfunded to the tune of $27 million in future years.
“There are challenges for the district moving ahead,” said District Superintendent Pam Sloan in a report on the 2015-16 budget. She said the district was moving toward deficit spending – spending more money than it has. “This comes as a result of the loss of revenue attributable to the expiration of the special purpose levy, stagnant state revenue growth and three negative reassessment cycles.”
If the tax levy fails, the district will be forced to make significant cuts including reducing teaching and support staff by as many as 200 positions in the next two years, along with cuts in technology and support for struggling learner programs.
Passage also will give the district a chance to catch its breath and spend less time putting out fires. Supple said more revenue will allow for greater long range planning including the development of a new five-year plan. In recent years, the district has had to concentrate on immediate financial issues, he said.