Local Election to Provide Budget Relief

Throughout this spring semester our staff and Board of Education have been evaluating potential budget cuts and changes in order to address a number of expenses which have quickly surpassed revenue over the past few years.  While our local property valuation and student enrollment provide some potential for increased funding down the road, unexpected increases in special education costs, employee costs, and utility costs have grown at a rate greater than can be absorbed with current funding levels.  Through attrition, one position for next year has been eliminated and one or more will likely be cut in the following year.  The Board is also evaluating potential changes to employee benefits in order to stabilize long-term costs.   

Unfortunately, decisions at the legislative level have placed our state on a path towards major financial and economic problems.  State revenue, due to income tax policy implemented a year ago, has decreased significantly and the promise of job growth has yet to be realized.  This combination of problems has forced our school and others to start making plans for a significant decrease in funding in the next few years.  One of those solutions, provided by legislators during this session, is to provide school districts greater authority to use the Local Option Budget (LOB) to generate revenue.

Prior to this year, a school district could only collect and spend the amount of money in the LOB equal to 30% of the general fund budget.  A district could have chosen, through a local election, to increase that amount to a maximum of 31%.  The recent school funding bill passed and signed by the Governor allows school districts to not only hold an election increasing the limit to 31% but then provide the Board of Education the authority to raise that level to a maximum of 33% for one year.  The law also provides for a district to hold another election to raise or maintain that level for one additional year.  This is a temporary solution but could provide our district, and others, time to phase down staffing and programs to better prepare for future state funding cuts.

The USD 423 Board of Education recently adopted a resolution to hold an election on June 24th, asking our community to allow for a budget increase equal to 31% of the general fund.  If our community supports this budget authority increase, the Board of Education would then have the authority to raise that level to 33% for one year.  The budget authority increase would involve a mill levy increase but the BOE may be able to minimize this increase for two reasons.  The first includes a provision in the funding bill which provides for additional support for LOB’s in certain districts, including ours.  This means that the state helps fund a portion of our LOB and we would not have to raise all of the money with local taxes.  This option doesn’t exist in any other fund for our district.  The second way to limit a tax increase is our ability to raise or lower our capital outlay mill levy to help cushion the overall mill rate change.  However, reducing our capital outlay levy reduces our budget for the repair, maintenance, and additions of facility and transportation needs.  These decisions will be made as local valuations and projected enrollment numbers are calculated.

More information about this upcoming election, the LOB budget, and school funding will be published and/or presented during the next few months to help clarify the issue.  If you have questions, please don’t hesitate to contact me at 345-5500 or higginsc@usd423.org.