Earlier this week, school districts statewide learned that state budget shortfalls would result in funding reductions from the department of education. With the state projecting a $1.6 billion shortfall, state agencies have been told they will have to reduce costs. For most agencies, this will mean a six percent reduction in their budget. For the department of education, the cuts will likely be in the two percent range.
The Barrow BOE has called a board meeting for Tuesday, August 19, 2008, at 6 p.m. to discuss the tax digest and funding issues. The meeting will be held at the Barrow County Professional Development Center and Central Offices, 179 W. Athens Street, Winder.
While the exact amount of the funding reduction is unknown, Barrow County Schools assistant superintendent for business services Ken Cato projects it will be somewhere between $1.2 million and $1.4 million, or just over one percent of the system’s $102.1 million budget.
While one percent may not sound like much, the revenue cuts could go deeper.
Complicating matters for financial planners is the homestead tax relief grant. Typically, that grant offsets the reduction in tax revenue created by homestead exemptions. That funding, usually available in October, may be delayed or even eliminated for this school year. This year, the grant was expected to provide $2.2 million in additional funding.
“Now, we won’t get that $2.2 million. That’s going to be critical for us as a school district relative to cash flow,” Cato said. The General Assembly will decide in January whether or not to release the funds. If the funds are disbursed, the school system may not receive the money until March or April, six months later than normal.
Preliminary tax digest numbers may mean even more financial hardship for the district. During budget preparations, the school system conservatively planned on a five percent increase in the tax digest. That number may be marginally higher than the actual growth in the digest.
“It doesn’t appear that we’ve had the growth that we’ve had in years past,” Cato said. However, the school systems’ projection should be very close to the mark, said Cato.
To deal with the projected shortfalls, the board must now consider whether to cut the budget, dip further into reserves or both. Increasing the school millage rate is another option before the board.
Cato said the first step will be to look at this year’s funding priorities and see what items can be cut or pushed back to the 2010 or even the 2011 budget.
“[The state is] telling us to prepare to cut the 2010 budget as well,” he said.
