After receiving new information, the Bartow County School System will be able to lower the fiscal year 2021 millage rate after all.
Since the July board meeting, the school district’s finance department has determined the system would still be able to fund its $134.3 million budget if the millage rate was lowered from the current 18.75 mills to 18.65 mills.
At the first of two public hearings Thursday, Superintendent Dr. Phillip Page asked Chief Financial Officer Megan Brown to make another millage rate presentation to the school board because the district had received additional data since the last board meeting “that brings into clarity the budget and what it should be looking like for next year.”
Brown gave board members three scenarios of what the millage rate could be if the Quality Basic Education Act was fully funded for the 2020-21 school year, if there was a reduction in QBE funding and nothing taken from the district’s fund balance and if there was a reduction in QBE funding that was made up from the fund balance.
To meet the $134.3 million budget for FY21, the millage rate would have been 17.18 mills if QBE had been fully funded at $77 million as it was last year.
With state funding for the school district decreasing by $10 million for this school year, the millage rate would have to have been 20.19 mills to meet the budget without dipping into the fund balance.
But since there is a statutory limit of 20 mills, “we would then have to go and ask to go over the 20-mill cap,” Brown said.
“This is the scenario we would be looking at if we did not have the fund balance to support the reduction in state QBE,” she said. “This is where fund balance becomes very important. As you look into the future, it’s very important to look at that fund balance in the future also.”
For FY21, the school district falls under scenario 3, a $10 million reduction in state QBE and using money from the fund balance to help offset the decrease.
With the state QBE funding dropping to $67 million this year from $77 million last year, the board voted to use $4.5 million from the fund balance to help make up the difference.
By doing that, the millage rate would need to be 18.67 mills to meet the budget.
Brown said 1 mill equals roughly $3 million in revenue for the system so reducing the proposed rate by one-tenth mill would decrease revenue by about $300,000.
She also said this year’s budget is based on collecting $55 million in property taxes, and dollars generated would be $57,074,756 with a millage rate of 18.65 mills and $57,380,787 at 18.75 mills if all tax money is collected.
Historically, however, only about 96% of tax revenue is collected, which would bring the dollars generated down to $54.7 million at 18.65 mills and $55 million at 18.75 mills.
Brown also explained the importance of keeping a healthy fund balance to get the system through times of lost revenue.
The FY19 ending fund balance was roughly $33 million – three months of payroll for the system – and while the FY20 figures haven’t been finalized yet, she estimates between $3.5 million and $4.5 million was added during FY20 due to an increase in title ad valorem, selling some assets, conservative spending and the COVID-19 closure.
That allows the system to take $4.5 million from the fund balance this year to help offset the loss of state QBE funding.
“We want to make sure that we’re not taking too much from our fund balance so that we don’t have to borrow money, which costs us more there,” Brown said. “We would eventually have to get into a TAN [tax anticipation note], and we all know that TANs cost money.”
The amount the system will be able to add the fund balance when the FY20 budget is closed out will bring the balance up to roughly $37 million so “we are comfortable taking it down to that $33 million mark” with a lower millage rate, Page said, noting the district needs to keep three months’ payroll in the fund balance.
“We got new information regarding revenue, and what we expect in revenue, we can say, OK, we can give a little bit back, just be at that three-month payroll, which is $33 million,” he said. “Therefore, that allowed us to do an 18.67 exactly, but we can say we can do [18.]65 just to be able to do that tenth and still feel comfortable. We certainly feel from our level that an 18.65 millage rate would be supported with our current budget.”
Page said he’s checked with about 10 school systems in the area, and none of them is recommending a millage rate decrease.
“I don’t personally know of any school system – and I haven’t looked at all of them in Georgia – that’s making a recommendation to reduce the millage in any way,” he said. “It’s either going up or staying the same.”
Vice Chairman Derek Keeney told Page he was “impressed with the expenditure control” shown in the budget that will enable the board to recommend a lower millage rate.
“The fact that this can trickle back and backwards calculate into certainly a reduced millage rate and the fact that your team recognizes what we’re trying to accomplish as far as tightening things up with the fund reserve, I just appreciate it,” he said.
“Finance has worked awfully hard,” Page said. “They’re constantly looking at new information coming in.”
The third public hearing on the proposed millage rate will be Aug. 17 at 6 p.m. in the board room of the central office at 65 Gilreath Road in Cartersville.
Following the hearing, board members will vote on the superintendent’s recommendation at the monthly business meeting.