By Christopher Smith
Dalton Public Schools has been “cut down to the bone” after years of financial struggles, says Superintendent Jim Hawkins.
That stark reality has members of the Board of Education spending hours tooling and retooling the school system’s budget for fiscal year 2015, which begins on July 1, in hopes of staving off painful cuts or tax increases. But a combination of both is likely if there’s not an unexpected boost in the local economy, officials said.
Options being discussed by board members include an across-the-board cut in salaries for all school staff of no more than 1 percent, ending some parts of bus transportation or requiring a fee to ride the bus.
Other options include a hiring chill that could have Hawkins personally overseeing whether to fill vacant spots after staff members retire or resign and a seemingly inevitable property tax rate increase.
Board members met to discuss the budget at a called meeting on Tuesday at Dalton Middle School. They are considering a resolution that they won’t discuss layoffs of staff and reductions to the school calendar, which sits at 182 days for students and 220 days for most staff members. Another resolution under consideration is to keep the reserve fund, which is currently $8 million, at no less than $7 million.
Board members are set to approve those resolutions at their Monday, March 10, meeting at City Hall at 6:30 p.m.
That reserve fund is a crucial component to the discussion, school officials said. That money is what carries the school system through the summer months when money gets tight and is later replenished in December when property tax bills are paid. The fund pays for salaries and daily operations during the summer, said Theresa Perry, the school system’s chief financial officer.
A budget forecast provided by the school system expects $61.9 million in revenue and $69.5 million in expenses for fiscal year 2015, leaving a $7.6 million shortfall. If there’s no change to the budget, the backup fund of $8 million would be reduced to approximately $500,000, which wouldn’t be enough to pay staff in the summer, Perry said.
Board members facing a similar crunch last year opted to use $4.5 million from the reserve fund, then roughly $12.5 million, instead of making deep cuts or raising taxes. That doesn’t appear to be an option this year.
Tax rate increase likely
A tax rate increase is something board members said they’re trying to “minimize” this year, but one is likely.
The rate currently sits at 7.845 mills. A mill is $1 of tax for every $1,000 of assessed value. For a $100,000 home at a 7.845 rate without any exemptions, the homeowner would pay $784.50 annually to the school system. Roughly 70 percent of school system tax revenue comes from businesses, school officials said.
After spending several hours Tuesday considering the budget with a variety of hypothetical cuts, board members were only able to reduce the shortfall to roughly $2.1 million, leaving a reserve fund of about $6 million. That’s still not enough to carry the school system through the tight summer months, Perry said.
“We’re doing everything we can on the other side (with cuts),” Board Chairman Danny Crutchfield said. “Our objective is to provide the best education and sometimes you can’t do that with the lowest tax rate in America. It requires investment.”
Only until board members looked at a .755 millage increase, bringing the total rate to 8.6 mills, was the budget in the black (including the cuts to salary and bus services).
“That rate is basically when you end up heading in the direction you want to head,” board member Steve Laird said.
That doesn’t mean the tax rate, if any, will be that high, Crutchfield said, emphasizing no decision has been made.
Board members typically adopt a tentative rate in May and vote on a final rate in October after information about the health of the tax digest is released by the Whitfield County tax commissioner in August.
Before the board can adopt an increase in the property tax rate, state law requires three public meetings.
Cutting bus services or adding a bus fee?
Much of Tuesday’s meeting was dedicated to finding savings in bus transportation, which currently costs roughly $2.4 million annually. School officials said ending bus services to Dalton High School and Morris Innovative High School would save $192,000, while cutting services to all elementary schools would save $204,000.
Hawkins said he’s “concerned” those cuts would mean elementary students would be put in danger if they walk to school, while high school students “just might not come to school.” The school system has already stopped bus service to elementary students in what officials call “parent responsibility zones,” streets within walking distance of elementary schools.
Board members discussed adding a service fee, without stating a specific cost, that parents would have to pay for their students to have bus access, but Hawkins said he is concerned some students wouldn’t pay. Roughly 70 percent of the students in the school system come from an impoverished area, school officials said.
Jennifer Phinney, director of school support, said if board members move to cut transportation or require a fee that some students might not be able to afford, the school system should be prepared to “enforce truancy laws.”
Georgia has a compulsory attendance law that could result in monetary fines to parents, juvenile jail for students or intervention from the Division of Family and Children Services (DFCS) if students miss weeks of schooling.
“Those 14- and 15-year-olds who don’t pay, you’re going to have to be willing to employ a social worker and do the five-day letter and the 10-day letter and take someone to court,” Phinney said. “I’m not opposed to that, philosophically. Parents should get their kids to school. But I think you’re going to have to be willing to do that.”
The $3.7 million fund tucked away?
School officials might be able to give the budget some relief by transferring $500,000 from a $3.7 million fund established by the city of Dalton in 2000 that was originally intended to build a public community theater at Dalton Middle School. The project ended before groundbreaking because it became too expensive and impractical, Perry said, adding that the money has stayed with the school system and grew $700,000 in interest over 14 years.
Board members are “hesitant” to use that fund to cover their shortfall, school officials said.
“The city has told the board that they can use that for whatever purposes they want to use it for,” Perry said. “It doesn't have to be earmarked for something like that theater.”
The board’s “preference” would be to use that money “for the community,” Perry said.
“We want to honor the spirit in the way it was originally intended,” Crutchfield said, when asked if the board would consider using that money to help relieve the system’s money problems. “We kind of held on to it because the intention was that somewhere down the road a joint venture would come out of it.”
Fourteen years later, nothing has happened.
“It’s kind of understood that it will be something public down the road,” Crutchfield said.
Hawkins: ‘We’ve already cut’
Sherwood Jones III, who began as a board member in January, questioned the need for some staff members.
“Some of the staff, are they necessary at this time?” he asked. “I’m not suggesting anyone be fired. But I think it’s important to look at staff.”
Hawkins explained that “we’ve already cut” in 2010. Thirty-two positions, including teachers, were cut that year, and 42 similar positions were added in 2012 after it became “absolutely necessary” to have them, Hawkins added.
“We experienced not having those positions for two years,” he said. “But we only put back what we needed. I told the board (in 2010) that we cut too deep, that we were drowning. Our community needed us to suck it up for two years, but we could not maintain that over time.”
Board member Rick Fromm said considering cuts to staff or school days isn’t something he would easily agree to.
“We don’t want to move backwards,” he said. “I really don’t want to move backwards on salaries either. We have a great system and great people. You can’t continue to take from them. Putting staff reductions back on the table negates last year’s conversation of restoring things.”
Searching for a crucial $500,000 cut
Board members charged school administrators with finding $500,000 in other cuts to avoid the need for a 1 percent salary reduction to all school staff.
“Can we look at areas other than impacting teachers?” Laird asked. “Someone has got to come back and find $500,000 to avoid the salary cut.”
Hawkins said the cuts will be found along with “consequences.”
“I don’t know how we are going to get there, but that’s what we’re going to work on,” he said. “That’s our target, to find $500,000. Buses are not in that, salary and days are not in that. That cut has to come from other kinds of things we will have to look for. But the consequences to those cuts will be laid out. And then it’s a risk management kind of decision. Is it worth the consequence to save? Is it worth the pain that it causes?”
Crutchfield said he believes the school system has managed taxpayer money well and that if people feel like criticizing board members they should consider that expenses have gone down from $61 million in fiscal year 2009 to $59.9 million in fiscal year 2013, despite an increase in the number of students from 6,836 to 7,703.
“Whatever our position is going to be once we decide that, we didn’t do this in a vacuum,” he said. “You have to take into account several years of recent history. That’s why, when we go back out and say this is what we are doing, and we have a meeting and people want to come talk about the millage rate, talk about cutting services, whatever it be, it’s going to be really important ... to understand the history.”
“All they’re going to hear, if we decide to, is that we’re raising the millage rate,” he continued. “That’s all certain people are going to hear. They’ll think, ‘They’re raising my taxes and they don’t know what the heck they’re doing over there.’ I think we’ve been fairly good stewards of our taxpayers’ investments during these years.”
Laird said board members are “doing our absolute best to keep everything open and on the table.”
“There is not an answer yet,” he said. “There’s a lot of things were looking at. We’re looking at all options.”