Fund balance less than recommended after budget approval

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June 21, 2012

Fund balance less than recommended after budget approval

Rachel Brown rachelbrown@daltoncitizen.com The Dalton Daily Citizen Thu Jun 21, 2012, 09:44 AM EDT

The general fund budget Whitfield Board of Education members approved Wednesday will leave a projected fund balance of just $3.4 million — less than half the recommended amount.

State officials recommend school systems’ fund balances — reserve money kept on hand to make payroll while waiting for local taxes to come in or to cover unexpected expenses — be at about 10 percent of the general fund budget, school system finance director Ron Hale said.

For the budget of $97.7 million in expenditures and $94 million in revenues for the fiscal year that begins July 1, that would be nearly $10 million. Yet a combination of rising health care costs, a shrinking local tax digest, overall increases in payroll and retirement costs, and a new local literacy initiative have stretched the budget to the point officials are limiting budget cuts that could increase the fund balance in hope that better financial times are around the corner.

“We’ve worked hard to eliminate any unnecessary costs, but we’re at a point now where we think we need to adopt that budget,” Superintendent Danny Hayes said.

Efforts to reduce the budget include continuing 10 furlough days per year for employees; not filling many vacated positions, including one for former assistant superintendent Dusty Brown who retired this year; and examining each department’s budget line item by line item, officials said. However, school board members committed early in the process to not laying off teachers or making other moves that would increase class sizes, saying community concerns about losing quality because of those kinds of cuts were growing.

While board Chairman Louis Fordham noted the budget for the upcoming fiscal year is “based on” a property tax increase of five mills to a total of $19.76 in tax for every $1,000 of assessed value, Hayes said the board won’t actually set the tax rate for a few months, likely in September. Officials could also draw more money from reserves or amend the budget to make more cuts.

Hale said school officials hope to see local business growing stronger because of the Whitfield County Board of Commissioners decision to do away with inventory taxes beginning this year. It’s a move that unexpectedly required the school system to absorb a $2.2 million cut for the upcoming fiscal year. Hale, who worked for Whitfield County government before the school system hired him in December, said school officials don’t oppose eliminating the inventory tax — they just need members of the public to understand it’s one of the reasons for the anticipated property tax increase.

He said he also hopes to see some changes in the way the state Legislature allocates funds to local schools. But he said the school system can likely continue down the current path for at least one more fiscal year — through June 2014 — before officials have to look seriously at more layoffs. The district has already cut 150 jobs in the last three years.

The budget for the current fiscal year, which ends June 30, is $89.1 million in revenue and $94.1 million in expenditures.

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Fund balance less than recommended after budget approval

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