Voters in Jefferson Parish will be asked by the Jefferson Parish School Board to vote on July 18 to extend and rededicate a four-mill property tax for ten years. The millage was originally dedicated to pay debt on bonds issued in the 1960’s and 1970’s. Bonds issued to support these capital projects will be completely retired in 1999, when the tax will expire unless extended by voters.
When initially presented to the Jefferson Parish School Board in April 1998, the extension of the tax would have been for operating purposes only, primarily the continued development of a Technology Department and maintenance and improvements. Rejected by school board members at that time, the extension of the millage was reconsidered and approved by a vote of 6 to 3 in its present form. Dissenting members cited the need for a strategic plan before going to the voters.
The extension and rededication on the ballot will dedicate one mill to development of the Technology Department; one mill to maintenance and improvements, including roof repair and replacement; and two mills to unspecified capital projects. One mill is estimated to bring in about $1.5 million.
The Board of Directors of the Bureau of Governmental Research voted on June 23, 1998, to oppose the rededication and extension of this millage. The proposal does not reflect adequate attention to the structure of the deficit facing Jefferson Parish Schools operations, primarily the level and funding of staffing at schools and the imbalance among revenue sources. The two mills proposed for capital projects are not based on a prioritized assessment of needs, without which it is impossible to know whether the millage is a solution, a “bandaid,” or a preventive measure.
FUNDAMENTAL PROBLEM
The Jefferson Parish School Board started its budget process for the 1998-99 school year facing an operating deficit of $8.9 million. Various measures agreed to on an interim basis have reduced that amount to $2.8 million. (The components of the school bond’s budget are discussed in a separate BGR Outlook on Jefferson publication.) The main reason for the immediate deficits appears to be the $8.2 million in raises for teachers approved by the board in 1997 without a comparable increase in revenues.
Recent and proposed uses of the General Fund Balance (the “rainy day “ fund) to balance the budget will draw the Fund down from the 6.3 percent it was of the FY 1997 budget to 2.4 percent by the end of FY 1999 — one year from now. Sound fiscal practice dictates a reserve of at least 5 percent to help cover deficits when unexpected costs (e.g., the result of flooding) or inadequate revenue projections (e.g., the 1997 decline in anticipated sales tax receipts) cause a one-time imbalance.
PROBLEM WITH THIS PROPOSAL
The main problem with this particular proposal is that three-fourths of it will go for maintenance and capital improvements needs that have not been identified, except for over $20 million in roof needs cited by the finance director. The three mills that could be used for maintenance and capital improvements would generate more than $45 million over the ten-year duration of the tax.
An analysis by a team of external auditors suggested that the entire four mills was needed in order to stabilize capital funding, but that estimate was based on FY 1994-1996 capital spending, not on an assessment of needs. In fact, this external analysis “…recommend(ed) that the system adopt a five year capital improvement plan which prioritizes expenditures and needs, and schedules such improvements in line with available funding.”
WHAT IS NEEDED
• a full analysis of the staffing levels and salaries
• a capital improvements plan with priorities for at least the next five years.
The plan should identify criteria for selection and prioritization of projects so that if new needs emerge, there can be a re-ranking of needs and priorities.
• a comprehensive revenue plan
A revenue plan for funding the school system does need to reley partially on the property tax, but 4-mills may still be too low even if the homestead exemption were to be removed for school funding.The property tax is a stable tax and taxes those who will see property values go up as public schools improve. The disadvantage is that property tax revenue does not rise as fast as sales tax revenue can. Sales tax receipts are more responsive to changes in the local economy and can help offset the effects of inflation on the school budgets.
The state MFP is an essential part of the funding equation. The allocation of money is largely dependent on the number of pupils. With recent declining enrollment the state payment has been reduced. Another component of the MFP funding formula is the local tax effort. More property tax revenue for the school system also means more MFP money for the budget.
These revenue factors, desired staffing and pay levels, and a capital improvement plan all need to be considered in a comprehensive revenue plan for the Jefferson Parish school system.
Text for July 18 Ballot
School District No. 1 Proposition
Shall School District No. I of the Parish of Jefferson, Louisiana (the “District”), be authorized to continue to levy a special tax of four(4) mills (tax previously levied for the purpose of paying debt service on General Obligation Bonds of the District) on all property subject to taxation in the District for a period of ten (10) years, beginning with the year 1998 and ending with the year 2007, for the purpose of giving addition support to the public elementary and secondary schools in the District with the proceeds of said tax, after application to the extent required to provide for the full retirement of all general obligation bonds currently outstanding to be dedicated and expended only in the manner and for those purposes act forth below: (1) the proceeds of 1 mill of such tax levy shell be expended only for the continuation and expansion of the Technology Department to include additional personnel, acquiring and maintaining equipment and supplies for educational and instructional purposes; (2) the proceeds of 2 mills of such tax levy shall be expended only for capital projects; and (3) the proceeds of 1 mill of such tax levy shall be expended only for maintaining and improving existing public school house and buildings throughout the District, including roof repair and replacement, repair replacement of heating and air conditioning systems?u
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