by Leslie Lytle, Messenger Staff Writer

“Doing nothing isn’t the answer. The schools’ fund balance will be decimated,” said Franklin County Commissioner David Eldridge at the July 23 Franklin County Commission budget workshop. The proposed budget calls for a 24 cent property tax increase, but provides no additional funding for the county schools’ operating expenses. To meet operating expenses for the coming year, the school system will need to draw $1.4 million from the fund balance. For the past two years, expenses have exceeded revenue. A fund balance draw at the same level next year will draw the reserve below the state mandated level of 3 percent of operating expenses.

Of the 24 cent tax increase, 11 cents will go to construction of the new middle schools, 5 cents to hiring additional corrections officers at the jail, and the remaining 6 cents to finance raises for county employees, excluding school system employees, and to maintain cash flow reserves, Mayor David Alexander said.

Eldridge proposed reducing the tax increase to 21 cents by cutting solid waste expense, the contribution to the hospital, reducing the capital improvement budget at the industrial park, and reducing the number of new correctional officers. He argued a 7 cent property tax increase would be needed for the next three years and 8 cents for the two subsequent years to address the schools’ budget dilemma.

However, Eldridge opposed raising property taxes. He also said cutting operating expenses in the schools was an “unrealistic objective.”

Alexander countered the county “needs to reduce expenses in the education arena.” Alexander argued that even with a 24 cent increase, an additional 16 cent increase would be needed next year to fund the county’s expenses.

“I cannot support this budget,” Alexander said. “A 40 cent increase in two years is unheard of in a rural county.”

County Finance Director Andrea Smith explained the county received less revenue than expected from growth because the state changed the commercial appraisal ratio. “We’re still realizing new residential growth revenue,” Smith said, “but because of the ratio change we’re coming out flat.”

Providing comparison to neighboring counties, Eldridge said tax revenue from property and sales tax, $34.7 million, was $6 million higher than the average. Eldridge said he removed Coffee County’s high $52 million in tax revenue from the average since it skewed the results. He also removed Grundy County, which has exceptionally low tax revenue.

Eldridge said increasing sales tax revenue from 2.25 percent to 2.75 percent could help fund the schools, but he took issue with increasing sales tax since city governments receive 25 percent of sales tax revenue. The estimated increase in county revenue would be $1.237 million.

Asked about Coffee County’s sales tax rate and if increasing the rate to 2.75 percent would drive customers to Coffee County, Eldridge said Coffee County already had a 2.75 percent rate, the highest rate allowed by law.

Eldridge pointed out per pupil spending in Franklin County was $10,300, $900 above the average of neighboring counties, excluding Coffee County.

“This implies our expenses are too high,” Eldridge said. He also stressed he opposed the reduction in the schools’ capital outlay budget to $100,000. “That’s not enough to maintain the buildings.”

The schools budget includes no raises for non-certified employees and bus drivers. Some certified employees would receive raises based on years of service and degree advancement.

The County Finance Committee rejected the schools’ budget three times. Alexander cited the excessive draw on the fund balance as the reason. The school board revised the budget a fourth time and this revised budget will be presented to the county commission for a vote on July 29 along with the proposed tax increase. If the commission rejects the schools’ budget, the school board will have 10 days to make additional revisions. If the county commission again rejects the school system’s budget, the schools will be funded at the 2018-19 level. If the county commission fails to approve an increase in school funding for three consecutive years, the state will mandate an annual increase of 3 percent.

Eldridge said the level of school funding by the county had remained constant over the past five years, but Basic Education Program (BEP) funding from the state had decreased proportional to the decline in student enrollment. Eldridge also noted the level of BEP funding was based on a county’s ability to pay. “Our ability to pay has probably hurt us,” he insisted.

School board member Sarah Liechty said, “I’m not sure at this point where we go. Our biggest expense is personnel, and always has been. We have cut 22 positions as enrollment decreased, but we cannot cut anymore and still maintain the state mandated student teacher ratio. Any changes we make to reduce the budget further would be drastic.”