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School financial woes explained

Article Date: 
15 June, 2012 (All day)

District employees are racked with cuts, and the school board is threatening an inevitable tax increase.  But where did things go wrong?
The answer is varied, but includes the effects of federal bail-out dollars, a low commercial tax base, decreased state funding for transportation, lowering property tax collection rates, student absences, decreased enrollment, and some overspending.
In Morgan, school district revenue projections for 2013 are made up of 69.9 percent state sources, 4 percent federal sources, and 26.1 percent local sources.  Federal funding in larger school districts such as Davis, Weber, Ogden and Salt Lake is much higher, ranging from 12 to 20 percent.  With federal bailouts over the last couple years, school districts have seen an increase in one-time federal funding.  However, federal funding is now lower and at levels that districts consider normal.
Other districts, even those comparable in size to Morgan, have higher local funding, ranging from 30 percent to as much as 48 percent.
“There are not a lot of communities that are like us,” Poll said.  The difference is in the commercial and residential tax base in other districts compared to the number of students.
Waning state funding of transportation is a key issue in the district’s financial problems, Poll said.  The state used to provide a 100 percent reimbursement for costs associated with bussing students to and from school.  That reduced to about 89 percent and is now about 65 percent.
“Until the legislature comes in and recognizes their obligation, the same pot of money is going to get watered down each year,” Poll said. 
Last year, the school board “significantly increased” the transportation levy so the district wasn’t using general fund monies to bus students, Poll said. 
Compared to all other school districts in the state, Morgan is only slightly above state average when looking at local tax rates used to fund education.  Five years ago before the bond used to construct facilities, Morgan was almost the lowest in the state.
The school district is also being affected by a lower property tax collection rate.  Fewer people are paying their property taxes in a timely manner.  Tax collection rates have slipped from the 98 percent in 2005 to 91.9 percent last year, and now to 89.1 percent, Poll said.
Adams said Morgan County could benefit from more vacation and “second” homes, as those residences are taxed at 100 percent of assessed value.  Primary residences are taxed at 55 percent of assessed value.
Poll said she was surprised when she figured out it would take a house worth $3.135 million to generate enough property taxes to educate one student. 
Poll also said student absences, measured in average daily membership, can drive down state revenue.
“It is important for our kids to come to school, not only for end-of-year evaluations,” Poll said.  “If we get low ADMs for schools, we lose some funding.”  In December, the school district lost $300,000 because of low ADMs compared to enrollment, which decreased about 60 students when comparing Oct. 1, 2010, to Oct. 1, 2011.
Durrant said the district should better track ADMs in the future and budget accordingly.  “It is a mistake on our part,” Durrant said. 
School officials are hoping enrollment increases another 40 students before the beginning of the 2012-2013 school year to prevent a repeat of losing state funding.  They noted that building permits are on the increase in the county this year compared to last year.
Some programs have overspent this year, adding to financial problems.  For example, the district spent $25,000 more on substitute teachers in 2012 than they did in 2011, Poll said.
“How do you predict sick people or days off, especially when you don’t have much in the way of fund balance to cushion it?” Poll asked.
One thing that is not in question is how Morgan spends a majority of its budget.
Typically, a majority of a school district’s expenditures are in teacher salary and benefits.  Morgan is no exception, spending about 87 percent of their budget on compensation such as salary, health insurance, social security, and retirement.
In Morgan, the average teacher costs the district $73,683 when salary, health insurance, retirement, and social security is figured in.  The average Morgan teacher salary alone is $47,670.  A first-year teacher makes a salary of about $33,000.