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School budget takes hit

Wednesday, June 13, 2012

Bedford County Board of Commissioners stunned both School Supt. Ray Butrum and County Finance Director Robert Daniel by passing tax rates Tuesday night which will force the school system to cut $438,000 out of the proposed budget it submitted to the county last month.

The school system approved property tax rates and all budgets except the general purpose school budget Tuesday night.

The tax rates approved add up to the same rate as in the current 2011-2012 fiscal year -- $2.27 per $100 assessed value -- but 6 cents is being shifted from the school system's tax rate to the debt service tax rate.

At the estimate of $73,000 in revenue for each cent on the property tax rate, that represents $438,000 in revenue shifted out of the school budget.

No public talk

That shift was not even discussed at the Financial Management Committee's last public meeting on May 22. It was passed without any discussion or debate.

When the Times-Gazette asked Commissioner J.D. "Bo" Wilson about the motion after the meeting, he said it had been discussed at the last meeting. But it's not in the minutes of that meeting, nor did the Times-Gazette reporter who covered that meeting recall it being discussed.

Daniel, who was at the finance committee meeting, and Butrum, who was also at the meeting and is a member of the finance committee, both said the first they heard of the change was Tuesday night. In fact, Butrum did not realize what had actually happened until he was asked about it by a reporter after the meeting.

The Tennessee Open Meetings Act requires that members of a governing body, like the county commission, discuss and debate public business during meetings which have been announced to, and are open to, the public.

'Out of whack'

Wilson told the Times-Gazette that the debt service fund "is getting out of whack" and that paying down county debt, much of it school-related, will benefit the school system by allowing it to more quickly build a badly-needed new high school at Cascade.

Among other sources of income, the debt service fund receives investment income from the funds received by the county when it sold Bedford County Medical Center. That income has dwindled away due to declining interest rates in the poor economy, a situation mentioned several times at previous finance committee meetings. The declining income has eaten away at the debt service fund's fund balance.

But school system officials and school board members, when the school system passed the proposed budget on May 18, described it as already tight.

In fact, the budget spends more than it takes in; the difference is coming out of the fund balance. The existing budget proposal has so small an ending fund balance that school board members considered asking for a tax increase, saying it wasn't good money management to have such a small cushion.

Budget cut needed

Other school board members had expressed disappointment that there wasn't a raise for non-certified school employees, only an adjustment in the schedule for longevity pay which would affect a small number of workers.

The school board ultimately decided not to ask for a tax increase -- but now, instead of a tax increase, it will have to figure out how to cut an additional $438,000 out of the $53 million budget.

Any school budget will have to be sent to the state for review under the "maintenance of effort" law. The state, using a complex formula, will determine whether county funding is at least as much for the new fiscal year as for the previous fiscal year. If the budget does not meet the maintenance of effort test, the state will reject it.

The tax rates approved Tuesday night by the commission:

County general fund: $1.11

Highway fund: 4 cents

Schools: 96 cents

Debt service: 16 cents

Car plea denied

Commissioners rejected a proposal to increase the county general fund to buy more cars for the county sheriff's department. The department is only scheduled to receive three new cars in the 2012-2013 budget, not the five it says is necessary to maintain its rotation of new vehicles.

Commissioner Bobby Fox spoke in favor of more vehicles.

"Replacing two or three a year," said Fox, "we're getting farther and farther behind."

But Wilson said the sheriff's department's fleet of 58 vehicles is too large and that if deputies did not take vehicles home with them the department could save money.

"I just don't support 58 vehicles at our sheriff's department," said Wilson.

The commission will hold a special called meeting at 6 p.m. on June 28 to consider the school budget and finalize any other budget issues. The school board's regular monthly meeting will be held June 21.