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FY 2016 city budget includes $1.1 million decrease in school system’s funding request

By Bill Short

Flag City LogoThe Millington Board of Mayor and Aldermen passed the FY 2016 Budget Ordinance on final reading this week with a $1.1 million decrease in the school system’s funding request.
Board members took the action Monday night during a special called meeting on a motion offered by Alderman Thomas McGhee and seconded by Alderman Larry Dagen.
The motion was passed by a 4-3 vote, with Aldermen Mike Caruthers, Frankie Dakin and Hank Hawkins dissenting.
Shortly before that vote, the board rejected separate amendments to the ordinance that were proposed by Caruthers and Hawkins.
Explaining his proposal, Caruthers said the “issue” was how to fully fund the municipal school system as well as the Capital Improvement Program loan for the city. He said Finance Director John Trusty told him that the $4.5 million loan will result in approximately a $300,000 debt service requirement.
Caruthers noted that the school system requested $1.6 million for the 2016 fiscal year, with $300,000 of that coming from prior-year funding.
Under Section 14 of the current Budget Ordinance, 50 percent of the revenue from the traffic cameras is put into an account to support construction of a new library. Based on the current budget, Caruthers said, 2 percent of that anticipated revenue would be $62,500, which would be deducted from the $300,000.
He recalled that, before the municipal school system was established, the feasibility studies conducted by Southern Educational Strategies showed that it would need $1.3 million as well as the revenue from the half-cent city sales tax increase.
Caruthers said Trusty told him that the sales tax will generate $1,415,000 next year. So, he proposed that $115,000 – the amount above $1.3 million – be applied to debt service.
He also proposed a 10-cent increase in the property tax rate, which would generate $165,200. That would provide extra money if the revenue from either the traffic cameras or the sales tax is lower than anticipated.
“At that time, we would provide the $1.3 million to the schools, as we had said we would do,” he noted. “So, the school board can do its planning, rather than having to go back and forth, like we’ve been doing this year.”
Next year, Caruthers said, that would allow the school board to use the excess of Maintenance of Effort – approximately $800,000 – to fund its debt out of the sales tax.
“It makes it an incentive for the school board to lower that Maintenance of Effort the best it can,” he noted. “Then, it gives us an incentive as the city to get as many businesses in and be as successful as we can.”
Caruthers said the city would take whatever is above the $1.3 million from the sales tax.
Alderman Bethany Huffman said the school system has no bonding or taxing authority. So, it would be the city’s loan and its payment out of the sales tax fund, not the school funds.
Trusty noted that, under Tennessee law, school systems are supposed to request their capital needs through the city and be incorporated into the city’s Capital Improvement Program.
“We would issue the debt,” he said, “and we would pay the debt.”
City Attorney Charles Perkins expressed “some reservations” about the $62,500 of anticipated revenue from the traffic cameras that Caruthers included in his proposed amendment. He said there has been a “major move” in the Tennessee General Assembly to “do away with” the cameras.
“I’d rather see you base it on property tax,” he noted. “Or at least, when you authorize the bond issue, you understand that there’s a possibility that this money may disappear.”
Caruthers said the purpose of his proposal was to provide the $1.3 million for the school system’s capital improvement during the upcoming fiscal year, because it “desperately” needs to renovate the Freshmen Academy.
“If we provide them the funding, we won’t need a property tax increase,” he said. “If we commit that money to the city instead of holding it for the schools, there probably will be a property tax increase next year.”
But Perkins said this was not a “life-or-death deal” Monday night, because the school board can always submit a capital request to the city board for approval. He noted that renovation of the Freshmen Academy could be a capital item that is not a part of the Maintenance of Effort.
“You need to separate capital from operations when dealing in government,” he said. “So, this is not the end of the world.”
Hawkins’ unsuccessful proposal was to give the school system 70 percent of last year’s 5-cent sales tax revenue for its operations budget during the upcoming fiscal year.
“I’m still of the opinion that to go from $1.3 million to $500,000 is just too big of a take-back,” he said, “especially, in the second year of operations.”
During an interview after the meeting, Dr. David Roper, superintendent of the school system, said he was “bitterly disappointed” with the vote. He noted that, in 2013, the same board unanimously adopted a resolution stating that the revenue from the half-cent sales tax increase would go to the schools.
By identical 4-3 votes at its June 9 meeting, the board rescinded that resolution and passed the Budget Ordinance on first reading.
“They have now completely reversed themselves and are cutting more than $1 million from the budget of the city’s own school system,” Roper said. “And I’m at a loss to understand what they’re thinking about.”
While also expressing disappointment, Caruthers noted that there are “still some things” the board might be able to do. He said he would discuss his proposal with Trusty the next day and “go through the numbers.”

Go to: Millington-News.com

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