Charleston County school officials are weighing the potential need for the first tax hike in seven years as the school district braces for record enrollment.
The school district’s $404 million operating budget is expected to grow to $419.5 million next school year while it’s revenue for operations is dipping to $400 million, driven in part by a $1.2 million decline in its property taxes.
Acting Superintendent Michael Bobby laid out the funding dilemma to the school board during a workshop last weekend, raising the possibility that it might be time for a rate increase.
The school district last raised its tax rate for operations in 2008. In 2013 the district did a “tax swap” where it reduced the tax rate for debt and increased the tax rate for operations by the same amount, creating a net reduction for taxpayers who live in their homes and who are exempt from paying taxes for school operations.
The problem now is that the tax base isn’t growing at the same rate as student enrollment, which is projected to rise by at least 1,200 students next school year to around 50,000 — the highest ever for Charleston County schools. Bobby said in an interview that the kind of growth the district is facing is equivalent to “opening up a good-sized high school every year.”
“It makes it extremely difficult to do that again,” Bobby said of avoiding a tax rate increase.
The biggest driver for the district’s $19.4 million increase in expenses for the 2015-2016 school year is a $10 million increase in general operating costs tied to things such as fringe benefits and materials and supplies. Another $9.4 million in new expenses is also projected including $2.1 million in funding for Orange Grove Charter School to serve middle school students and a state-mandated step increase for teachers, which will cost $3.5 million. A step increase is a pay raise based on the number of years an employee has worked.
Having to deal with those rising costs amid a declining tax base is a new issue for the school district. Bobby said in his seven years with Charleston County schools there has never been a decline in tax revenue for school operations — even during the Great Recession.
“This is a very unique situation for us,” Bobby said.
Bobby has suggested the school board consider a plan to incrementally increase its property tax rate over the next several years to keep pace with its growing financial demands. He stopped short of suggesting how great a hike the school board should consider, saying that any increase would depend on what other budget decisions are made in the coming month.
But some school board members are already saying they are reluctant to jump on the tax rate hike bandwagon.
Board member Todd Garrett told Bobby at the workshop that he would not support raising taxes. Garrett said later that the school board just asked voters to support the extension of the 1 percent sales tax for school construction “with the implicit promise that it would keep their property taxes from rising.”
“While capital and operating are two different pots of money, it would be disingenuous for us to go right back and say that we need a tax hike to pay for operating,” Garrett said.
Instead Garrett wants to see the district cut administrative costs.
“There are obvious, low-hanging fruit for cutting costs in the district office, where we can refocus those resources towards teachers’ and principals’ salaries,” he said.
Board member Chris Collins said he wants the district to focus on where it can make cuts to its budget before he would consider rasing the tax rate.
Collins would like to see the district evaluate and possibly eliminate or scale down programs or services that aren’t effective or aren’t doing what they were designed to do. He also supports reducing administrative costs.
“I don’t want a bunch of bureaucracy,” Collins said.
The district has developed a list of nearly $6 million budget cuts for the board to consider. Among the largest potential money savers would be increasing class sizes in grades K-3 by one student for a $2 million savings in staffing. Other proposed cuts include $300,000 in funding reductions to the district’s central office, $575,000 to cut community eduction programs and $1.2 million in savings by creating a payment scale for bus transportation to magnet schools.
Board members were mixed on those cuts. Several board members told Bobby they would not support creating a payment scale for transportation to magnet schools.
School Board Chairwoman Cindy Bohn Coats asked Bobby to better identify what’s driving the budget increases tied to existing schools and programs such as a number of new courses being offered at Wando High School’s Center for Advanced Studies.
“What are we adding?” Coats asked. “What are we teaching in places next year we’re not teaching this year, but it’s costing more money?”
The district will hold another budget workshop with the school board on Thursday. The board will hold its first reading of the school district’s 2015-2016 budget next month.
Reach Amanda Kerr at 937-5546 or on Twitter at @PCAmandaKerr.