Lower enrollment results in proposed $205K funding cut for Hawkins schools

Jeff Bobo • Jul 2, 2019 at 9:27 AM

ROGERSVILLE — It's been six years since the Hawkins County Commission approved a 12-cent property tax increase for county schools, but in recent years those funds have gradually been shifted away from the school system to the county general fund.

On Monday, the commission's Budget Committee voted 6-1 to recommend the reallocation of 2 cents of property tax revenue from the county school system to the county general fund in the proposed 2019-20 fiscal year budget.

A penny on the property tax roll amounts to about $102,810 in revenue.

That amounts to approximately $205,000 in revenue, but it could have been worse.

State OKs cutting school revenue

Due to decreased enrollment, the state gave Hawkins County permission to reallocate up to 3 cents of property tax revenue from the school system without affecting maintenance of effort regulations.

Between 2017-18 and 2018-19, Hawkins County's enrollment decreased by 124 students. The school system receives about $7,500 annually from the state per student.

If the county didn't reallocate that property tax revenue from the schools, next year it would be counted as maintenance of effort and couldn’t be cut.

The commission's plan for that $205,000 is to use it to help address a long list of capital outlay projects that have been delayed due to lack of funding.

If approved, that will amount to a total of 9.5 cents reallocated from the school system to the county general fund in three consecutive fiscal years. 

In 2017-18, the County Commission cut the school system's property tax allocation by 4 cents, and last year that allocation was cut by another 3.5 cents.

‘We've got to look at the whole picture’

The sole purpose of Mondays special called Budget Committee meeting was to discuss the proposed school funding reduction. The commission's committee hearing room next to the county mayor's office was standing room only for Monday's meeting, filled with teachers and administrators.

The general consensus among commissioners Monday was that the school system could absorb that $205,000 revenue reduction easier than the county general fund.

The first draft of the proposed 2019-20 county general fund budget indicated a very slim $200,000 surplus.

“We've got to look at the whole picture, not just part of the picture,” said Commissioner Rick Brewer. “My concern is if we do not take this money this year, it becomes a maintenance of effort. If we've got the money next year or not, we've still got to come up with it, even if it means raising taxes.”

Brewer, who chairs the Public Buildings Committee, noted that there are currently more than 40 county facility repair or improvement projects pending.

School savings continues to increase

As for the county school budget, Budget Committee Chairman John Metz noted that its reserve fund has continued to grow steadily since receiving the 12-cent property tax increase.

At the end of 2014-15, the school system had a fund balance of $8 million; followed by $9.27 million in 2015-16; $10.93 million in 2016-17; and $12.5 million in 2017-18. The 2018-19 school fund balance hasn't been determined.

The current proposed 2019-20 school budget calls for $3.1 million to be drawn from savings, although Metz noted that historically the school system has overestimated expenditures and underestimated revenue.

Metz made the motion to recommend to the full commission that it reduce the school allocation by 2 cents in the proposed 2019-20 budget. The only no vote was cast by Commissioner Keith Gibson.

Shifting funds in the school budget

Two school budget issues were discussed Monday as possible arguments in favor of the 2-cent reduction.

The BOE has already proposed reducing its own general fund property tax allocation by 11 cents in 2019-20 and shifting those funds toward a capital outlay line item. As a result, that $1.1 million in property tax revenue will be used to complete some outstanding school facility improvement projects. 

And by removing that revenue from the general fund, that means the county doesn’t have to share that property tax revenue with the Rogersville City School or Kingsport City School systems.

Addressing enrollment with Virtual Academy 

The Board of Education is also taking steps to recoup its enrollment losses with a Virtual Academy that would allow home schooled children to remain at home using a county online curriculum. But the plan requires quite a bit of up-front expenditure.

Director of Schools Matt Hixson acknowledged that the creation of a central office supervisor position to manage the Virtual Academy is an investment and a leap of faith.

Hixson rejected the notion that the school system is “top heavy” with central office staff.

Hawkins County Schools is 10th out of 16 school districts in the region with regards to central office supervisor-to-student ratio. For every 423 students, there's a central office supervisor overseeing their educational programs. Hixson told commissioners that Rogersville City School has an 83-to-1 supervisor to student ratio.

“I think if we were coming to you and say we're adding a supervisor but we're not doing anything extra proactively, that would be an issue,” Hixson said. “But what you have in front of you is a plan to think outside the box to get some of those kids back into the fold. ... It doesn't take much for that to make a positive difference in that income. If you're talking $100,000, that's 10 kids in the academy, and that's easily attainable in our frame of mind.”

The next Budget Committee hearing regarding the proposed 2019-20 budget is scheduled for July 15 at 3 p.m.