School holds budget hearing for 2008, superintendent says it is ‘realistic and tight’

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Following state law, the Switzerland County School Corporation held its annual public hearing on its 2008 budget on Monday night, and as the process of getting a budget approved for next year moves forward, school officials feel that the budget they are proposing is a tight one, but is also realistic.

“It’s a tight budget,” superintendent Tracy Caddell said at the meeting. “But we think this is a realistic budget. In the past we have not spend 100-percent of our appropriations for each year. When Ann Geyman was doing what she was able to do, it was, in part, because we were only spending about 92 or 93 percent of our appropriations. As an internal control, we’ve tried to build our budget as close to what we’re actually going to spend.”

The superintendent said that this is the first step, with the school board discussing and adopting the advertised budget at its meeting on September 24th. Once it is approved, it goes to the State Board, where school officials will meet with state officials to whittle the budget down to what the state will actually allow.

The total budget for all funds is $14,447,511; an increase of just $36,728 over the 2007 budget – but the final budget that is approved by the state will bring that advertised figure down.

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The advertised budget for 2008 in the general fund is $10,645,905 – which is less than last year’s advertised budget of $11,287,385.

Along with tightening the budget in terms of appropriations, the superintendent also said that declining enrollment led to the elimination of positions last year; and that the system is hoping that health insurance costs remain steady for the short term.

Of the proposed budget, the general fund provides very little room for adjustment, as the superintendent told the board and the audience that 89-percent of the general fund goes for salaries and benefits for school employees.

“Once we put in insurance costs, there’s not much room left,” Tracy Caddell said. “When it comes to the general fund, it’s pretty fixed.”

Another gray area that school officials had to consider was that the budget had to be built while not knowing what the assessed valuation of the county will be. What that figure comes in at will determine what tax rate landowners eventually pay here. If the assessed valuation – the total value of land in the county – is higher than the figure the school used to create its budget, then tax rates will go down. If it’s lower, then tax rates will go up.

This year, the school corporation used an assessed valuation of $450 million to set its budget – that figure is much lower than assessed values in previous years, but gives the school a cushion in the event values here fall.

The general fund is where the school raises money for things such as payroll; payments to programs such as the vocational school; remediation; Special Services Unit payments; guidance and healthcare personnel; library staff and supplies; professional development; school board salaries and fees; central office staff; and insurance.

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Debt Service is another fund that the school has in its budget. It is used to pay debt that the school corporation owes on school buildings.

The advertised amount for debt service for next year is $593,606, which is slightly higher than last year’s budget because the school board has the option of putting $50,000 in this fund that it could loan to itself in case of an emergency – such as a fire in a building or a natural disaster.

The debt service is also an area where the Switzerland County School Endowment Corporation comes into play. Since 2003, the endowment corporation has paid the debt service portion of the budget, saving Switzerland County taxpayers money. If that continues, then the final debt service figure assigned by the state will not impact taxpayers.

The superintendent reported on Monday night that the school corporation has three debts: Switzerland County Elementary School; Jefferson-Craig Elementary School; and Switzerland County Middle School.

Switzerland County Elementary School has a lease rental loan that matures on January 1st, 2011; and the corporation owes $319,833 at a interest rate of seven percent.

Bill Roberts asked if it would make sense to go ahead and pay off this loan, but school attorney Ron Hocker said that he investigated doing that, but paying the loan off early would result in very small savings because of how the loan is structured, and it makes more sense to keep the money here and available rather than retiring the debt.

Jefferson-Craig Elementary School has basically been paid off, as the corporation owes one more payment of $16,226.01 – which will be paid in December. That was also at a rate of seven percent, but it is a Common School Loan from the state.

The middle school is the biggest debt, with the corporation still owing $4,751,337 at an interest rate of 5.25-percent. That loan matures on July 1st, 2023.

Ron Hocker reported that the middle school is also a Common School Loan, which is a state program that will allow a school corporation to pay off the loan early, but you still have to pay all of the interest that a corporation would pay if the loan went to maturity – so it makes very little sense to pay it off in a lump sum or early.

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The other four funds that are a part of the school corporation’s budget are capital projects; transportation; bus replacement; and special education/preschool.

Capital projects is another fund that is helped by the endowment corporation, which provides money to fund capital expenditures in the form of gifts to the school corporation. This year’s advertised rate is $1287.000 – up slightly from last year.

Transportation is an area that the state legislature has made deep cuts to school corporations, forcing schools to transfer those costs onto property taxes at the local level. The 2008 advertised rate is $1,296,000; while last year’s rate was $1,225,264.

“This is our tightest fund,” the superintendent said. “Each year we have been borrowing from the Bond Bank to pay for transportation, and then we pay it back in December. Without the state funds, it’s tough on every school corporation to provide transportation for students.”

The school corporation is also required by the state to have a bus replacement fund, and in the coming year the school expects to purchase six new buses, and also is planning on assuming six current bus routes in a transfer from being contract routes by private carriers to corporation routes.

This year’s figure is $592,000; which is up from $222,500 last year because of the number of bus purchases.

The final budget category is special education/preschool; and this is set by the state.

Every school corporation must budget $2,750 per child; so the Switzerland County figure is $33,000.

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The school board will now consider the budget until its September 24th meeting, when changes can be made and the budget adopted. That meeting is open to the public.