The Brown County Schools Board of Trustees has adopted a budget which will not cause tax rates to increase.
The expected tax rate for the school corporation will cost property taxpayers between 76 cents and 77 1/2 cents per $100 of assessed property value, financial consultant Bob Harris said at a public budget hearing earlier this month.
The exact rate will depend on what the assessed property value will be for the county, which is provided by the state.
“It will be very flat and very consistent,” he said about the district’s tax rate.
The district’s total advertised budget is going down by about $1.7 million.
The 2019 budget was advertised at $25,317,185; the budget for 2018 was advertised at $27,057,764.
For 2018, $9,690,699 was to come from property taxes and $319,009 from income taxes, according to a presentation given by the Brown County Redevelopment Commission last month. The school district gets almost 60 percent of local property tax money and about 5 percent of local income tax money.
The district’s referendum fund is projected to bring in $1,010,000, and the district is projected to receive $12,397,756 in tuition support from the state. Both of those figures are included as part of the total budget projection.
The school district’s budget is the biggest by far among local tax-receiving entities. Brown County government receives $4,894,909 from property taxes and $5,034,763 from income taxes.
Tracking spending
The way the school district’s money will be tracked also will be changing starting in 2019 after the state legislature changed the budget process last year.
Currently, the district has seven funds it pulls from for different reasons, like the general fund and the bus replacement fund. In 2019, those seven funds will be condensed to five.
Two “buckets” will be created: for education expenses and operations expenses. The state did this to better monitor how schools spend money on educating students and keeping the district running.
The district’s capital projects, transportation and bus replacement funds will be replaced by the operations fund. That fund will be used to pay non-academic related expenses, like transportation and bus expenses or utilities and insurance expenses.
The general fund will now be called the education fund, which can only be used for expenses related directly to classroom instruction, Superintendent Laura Hammack explained during a community conversation in September.
For example, right now, Hammack’s salary is paid out of the general fund like other staff and teachers, but starting next year, her salary will come out of the operations fund since she does not work directly with students. Other non-academic-related expenses include custodial and maintenance expenses; repairs to buildings, facilities and equipment; and transportation and bus expenses.
“The budgets will look a little bit different as far as funds that you’re going to approve; however, the bottom line is we’re going to get about the same amount of property tax we got this year, maybe a little bit more, but the tax rate will stay level,” Harris said Oct. 4.
Harris said that splitting the general fund expenses in between two funds will require the school board to make transfers from the education fund, which receives all of the tuition support from the state, to the operations fund.
“There’s no way we can leave all that money in the education fund; and our utilities, insurance and all the other salaries we’ve always paid out of general fund, there’s no way we can cover that with the (tax) money we get just for that fund. We’re going to have to transfer some cash,” Harris said.
Focus on funding
The estimate for the operations fund in 2019 was advertised as $7,909,500. The current property tax levy for that fund is $4,545,454, according to the notice to the taxpayers.
Money will be transferred from the education fund to the operations fund every year to help cover the difference in tax money received and expenses coming out of that fund.
The education fund is estimated to receive $12,397,756 in tuition support from the state. Tuition support is based on how many students are enrolled in the school district.
That fund will continue to have less money coming into it as the school district loses students. As of Sept. 17, the district had 90 fewer students enrolled than at the same time in 2017, which translates into about $500,000 less in state funding.
Factors for this drop include birth rates declining by 26 percent over the last 15 years, and that 73 percent of the county’s population is over age 45, which is traditionally an age people don’t give birth to children.
The 25- to 44-year-old population also has decreased by 31 percent. Other factors include families choosing to educate their children at home, and a tuition transfer law that allows families to go enroll in school districts outside of their home county without paying extra.
As a result of the decline in tuition support, one step the district will take is to continue to reduce the number of paraprofessionals and teachers through attrition, not by laying them off. Other steps include using grant funds to pay for training and not offering benefits to future part-time employees.
The district’s debt service, rainy day and referendum funds will remain the same as they are now.
In 2017, an 8-cent local referendum generated around $980,000 in additional property tax funding for the school district, with part of it going to the Brown County Career Resource Center. The referendum is helping to pay teacher salaries.
That referendum rate is one of the top 10 lowest in the state, Hammack said during her community conversation last month. Voters in Hobart in northern Indiana are paying an additional 1.04 cents per $100 of assessed property value, she said.
Hammack also said that 82 percent of school corporation tax rates across the state are higher than Brown County Schools’ tax rate.
The district’s rainy day fund was advertised at zero dollars because the district is not planning on spending any money out of that. “We don’t have excessive money right now to transfer into rainy day, so we’re just going to kind of just leave that fund alone,” Harris said.
The debt service fund in 2019 is budgeted slightly less than last year. For 2018, that fund was advertised at $4,183,412. For 2019, it is just under $4 million at $3,999,929.
“The property tax levy we can have with that debt fund is $5.5 million. The one in place right now is $4.1 million. That’s the property taxes we receive for debt right now. That’s probably real close to what we’re going to have next year,” Harris said.
“We could collect $5.4 (million) if the board chooses to do that. It would raise the property taxes probably another 30 to 35 cents. In the past you elected to lower down and keep property taxes at a level rate so that our taxpayers don’t feel this increase, decrease, increase, decrease type thing.”
