Fayette BoE braces for declining budget


The Fayette County Board of Education on May 17 will begin a discussion that will lead to the adoption of the 2011-2012 budget by the end of June. The board in that discussion and those that will likely follow will have to grapple with rising expenses and decreasing revenues that, by 2012-2013 or sooner, could have significant consequences.

In addition, falling student enrollment at some point in the next year or two will translate into fewer teachers and parapros needed to teach fewer kids. Fewer students taught by fewer teachers adds up to fewer classrooms needed, raising the possibility of closing or consolidating some of the county’s 17 elementary schools.

Fayette is like many other communities in the nation that are struggling with falling revenues from the recession that is now spanning years.

Like so many others, Fayette County’s tax digest is expected to take another hit this year and is expected to decrease 4-5 percent, according to Tax Assessor Joel Benton.

Those property tax dollars and vehicle tags historically make up about half of the school system’s general fund that pays for school system operations.

Meanwhile, the state dollars that make up approximately half of the general fund revenue are also in question.

Even if the state Department of Education does not take a funding hit, Fayette will still see a decrease in QBE (Quality Basic Education) dollars because those dollars are based on student enrollment, to the tune of approximately $4,000 per student, and Fayette’s enrollment has been falling for four years. That decline is expected to continue.

The current and potentially future state of the school system’s budget was referenced in April in a document compiled by school system Audits & Financial Reporting Coordinator Tom Gray. The document provided a look at school system revenues, expenses and student enrollment for the years 2011-2013.

The report showed current state and local revenues continuing to fall and school system expenses continuing to rise. The projection shows the school system for 2010-2011 with $180.5 million in combined state and local revenues in the general fund, $178 million in expenditures and a fund balance, much of which was carried over from last year, at $19.9 million.

The projection for the 2011-2012 school year shows general fund revenues of $172 million and expenditures of $185 million, with increases coming from rising healthcare costs and teacher step raises, and a fund balance of $7 million. The deficit gap widens even further in the 2012-2013 school year with combined revenues of $170 million and expenditures of $187 million and a fund balance of -$6 million.

Fund balances in the general fund from 2002-2009 fluctuated from a low of $1.7 million in 2008 to a high of $9.2 million in 2002 and averaged approximately $5.6 million for the period. A customary fiscal goal for school systems is to keep an equivalent of 10 percent or more of the general fund budget in reserve.

As significant as any feature of the document was the reality that without either significant growth in the local and state economies and/or some other source of revenue generation or a significant reduction in expenditures, a negative separation in revenues and expenditures will continue for an undetermined period of time.

In terms of state QBE dollars, the Fayette school system hit an all-time revenue high of $92.6 million in 2007-2008 school year, according to information provided by Gray. That figure dropped to $86.1 million in 2008-2009, to $86 million in 2009-2010 and to $82.43 million in the current 2010-2011 school year. Gray’s forecast shows state QBE revenues at $80 million for 20111-2012 and $78.5 million for 2012-2013.

Enrollment saw a steady climb since 2001 and then peaked in 2006-2007 with 22,367 students, Gray indicated on the chart. Enrollment continued its decline each year and sits at 20,913 for the current school year, essentially the same enrollment seen by the school system in 2002-2003.

The falling enrollment numbers are expected to continue, dropping to an estimated 20,700 students in 2011-2012 and to 20,500 in 2012-2013.

Every decrease of 250 students amounts to an estimated $1 million decrease in QBE dollars for the general fund. Decreases in enrollment also equate at some point to fewer teaching positions.

And with local funding through property taxes, those, too, rose steadily since 2000 when Fayette’s economy was booming. And school system local revenue totaled approximately $74 million in 2007-2008, $81.4 million in 2008-2009 and peaked at $85.88 million in 2009-2010. Today, that revenue is closer to $78 million due to last year’s decrease in the tax digest.

Though the budget will be discussed to some degree next week, it is likely that the board will have one or more subsequent budget work sessions, according to Comptroller Laura Brock.