School budget rate for 2007 could possibly fall if assessment meets state expectations

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The Switzerland County School Board officially adopted its 2007 budget at its meeting on Monday night, and if projects are correct from the state – the rate could actually be below 2006 figures.

School superintendent Tracy Caddell said that the 2007 general fund budget is being advertised at $11.2 million – that’s up about three percent from the $10.9 budget for 2006. The figure is merely the budget that the school is advertising, and will officially be set once school officials meet with representatives of the Indiana Department of Local Government Finance. That meeting is expected to take place some time next month.

The rate for the 2007 budget is $1.75 – which is the same rate that was advertised for the 2006 budget. Last year, the final budget approved by the state was $1.11.

But the unknown in the entire process is where the county’s assessed valuation is going to come in. Last year, the county’s assessment was $380 million. If it stays at that figure, Superintendent Caddell estimates that property owner’s taxes for the schools will go up about four cents.

“The state has told me that it was anticipating an assessment here for our county of $405 million,” Tracy Caddell said. “If the state is right, then the tax rate would actually go down for the schools.”

If the state figure turns out to be accurate, then it is estimated that the final school tax rate will be about $1.07 – a drop of four cents over the 2006 budget.

“That would be a very good thing,” Tracy Caddell said.

This rate is also based on the assumption that the Department of Local Government Finance will again approve a gift from the Switzerland County Endowment Corporation which pays the school’s debt service rate. This results in a significant savings for property owners.

The endowment corporation has already approved paying the debt service bill, but it has to be officially approved by the state.

“This is all with the anticipation that the endowment corporation will be allowed to pick up about 30-cents of the debt service rate,” the superintendent said. “Until the Department of Local Government Finance accepts that, then that’s where we will be.”

The savings for taxpayers from the school corporation also falls because the schools have been able to use endowment corporation gifts to offset the costs of capital projects.

“In the capital projects fund, we are advertising a rate of 23-cents, but the actual rate will be closer to 20-cents,” Tracy Caddell said. “Under the state law, we could have a rate of 42-cents. That’s another 20-cents off of the tax rate because we use the endowment corporation to fund capital projects rather than put it on debt service. If you add that to the debt service money, taxpayers are saving about 50-cents off of the tax rate.”

What does that mean?

Tracy Caddell says that if the final school tax rate is $1.10, without the endowment corporation, the actual rate paid by taxpayers would be $1.60.

“That’s a savings of 32-percent,” the superintendent said. “The taxpayers of Switzerland County are only paying about 68-percent of what they would be paying without the endowment corporation. That’s significant. That’s one-third of the total school tax rate that’s being picked up by the endowment corporation.”

The superintendent is also mindful that such a bounty could be short lived for taxpayers.

“I know that there’s been discussion in the past about cutting the school endowment funding,” Superintendent Caddell said. “If that would ever occur, then taxpayers would see their rate go up by about one-third, because we’d have to function without those funds.”

The superintendent also pointed out that 87-percent of the 2007 budget in the general fund is going to salaries and benefits. Those are fixed costs that the school corporation has very little control over – especially as it pertains to health insurance benefits – where everyone is feeling the effect of rising premiums.

“Health insurance premiums have increased from $660,000 five years ago to $1.5 million, which is what we are anticipating in 2007,” the superintendent said. “That’s just the school corporation’s portion of the premiums. That’s about 10-percent of the general fund budget going just to health insurance premiums. I think that’s pretty significant.”

Tracy Caddell said that rising health care premiums have been putting a real strain on programming; using up funds that could have gone to hiring more teachers, purchasing supplies, or other capital project items. Unlike a retail business that may be able to raise prices to make up for rising premiums, the school corporation must absorb those increases.

Transportation continues to be a point of concern for the school corporation, as the state continues to dwindle its funding support for transportation costs for schools. New state funding guidelines adopted by Governor Mitch Daniels could also mean problems for the Switzerland County system in the future.

“In past years, there was a minimum guarantee of a two percent raise in funding from the state for each school corporation,” Tracy Caddell said. “That’s now gone. The money now follows the student, so small, rural school corporations that are losing enrollment are also losing funding. That becomes a problem because you still have to pay the fixed costs. The lights have to be on and the buses have to run, regardless of how many students there are.”

Superintendent Caddell said that the Switzerland County School Corporation is down two students over last year’s count. If that trend continues, it won’t take long for the school corporation to see some hardships.

“Our revenue is now growing to meet our expenses,” Tracy Caddell said. “That’s a real concern for us.”

Still, the financial health of the school corporation continues to thrive. Tracy Caddell said that when he arrived as superintendent the tax rate was $5.56. That was under the old funding formula, which tripled values and rates; so a comparable rate would be one-third of that, which is about $1.85.

Last year’s rate was $1.11.

“I’m really happy with the overall tax situation for Switzerland County residents,” the superintendent said. “Two years ago we were 292nd out of 292 school corporation’s in terms of tax rate. We had the lowest rate in the state. I still anticipate that we will at least be in the bottom 10 in the state of Indiana this year for school corporations. Obviously we won’t know until the final figures come out, but I think we will be anywhere from 287 to 292 in terms of lowest tax rate.

“I don’t know where we’re going to fall – but it’s going to be low.”

– Pat Lanman