The school board will vote on Superintendent of Schools Dr. Frank Petruzielo’s recommended budget at tonight’s meeting.
The meeting was relocated to the Cherokee High School auditorium to accommodate the large crowd anticipated, said Barbara Jacoby, Cherokee County School District director of Public Information, Communications and Partnerships. The crowd is expected in response to a request on the agenda to consider calling an ethics hearing into actions by Board Member Kelly Marlow.
“The decision was made based on numerous indications that attendance levels likely will exceed the School Board auditorium capacity,” Jacoby said.
The fiscal year began July 1 and ends June 30, 2014. A customary spending resolution was approved in June to allow for spending from July 1 to 31, before the new budget is adopted.
The annual CCSD budget is made up of numerous funds and parts. Some of
the main ones include the general fund, which
includes day-to-day operating funds; the building fund, which includes funds use to construct, renovate or update schools; and the debt service and 1 percent bond fund, which are used to repay debts incurred from the cost of building, renovating and updating schools, facilities and technology, documents show.
Of the $496.18 million total recommended budget, $321.9 million is in the general fund, $89.5 million is in the building fund, $51.18 million is in the debt service and 1 percent bond fund, $12.1 million is in state and federal grants revenue, $19.3 million is for school food service and $2.1 million is other funds, the budget document shows.
The largest general fund expense is instruction, costing about $198 million. The second and third largest general fund expenses are school administration, and maintenance and operation, each costing about $20 million.
Another $10 million from federal and state grants will be used for instruction, bringing the instruction expenditure total to about $208 million, or a little more than 67 percent of the total funds.
In the recommended budget for fiscal 2013-14, Petruzielo calls for reducing the number of furlough days from eight to four, bringing the district up to 179 instructional days.
“The School Board and I are committed to returning students to a 180-day calendar, as our primary mission is teaching and learning, and I appreciate the efforts by the Ad Hoc Budget Committee to make this proposal possible,” Petruzielo said at the June CCSD meeting.
The recommended budget includes $7.16 million in cuts, including teaching staff reductions (through attrition), transferring building maintenance costs to the SPLOST budget, modifying the custodial services employment model, support and paraprofessional staff reductions, allocating workers’ compensation costs to the departments, increasing Before and After School program fees, eliminating contributions from CCSD for dental and long-term disability benefits, realigning transportation routes, privatizing grounds services, reducing utility costs, eliminating portable classrooms and reassigning custodial staff.
“The estimated savings for the 2013-14 fiscal year as a result of outsourcing grounds maintenance services beginning July 1 is $100,000,” Jacoby said Tuesday. “The Superintendent’s recommendation to outsource custodial services is on the agenda for Wednesday’s meeting. The estimated cost savings for beginning a contract in the fall, which is to be negotiated by the superintendent following the School Board’s selection of a company at Wednesday’s meeting, is $3 million for the 2013-14 fiscal year.”
The millage rate has been the same since the 2010-11 fiscal year, and is recommended to remain at 19.85. According to CCSD documents, the proposed 2013 millage rate is below the roll back millage rate, which means average property owners will not see significant school tax increases.
“The average property owner will not see an increase in the school portion of his or her tax bill and there is no ‘back-door’ tax increase,” Jacoby said Tuesday.
Cherokee County property values have decreased by 29 percent between 2008 and 2012, and taxes have decreased, but the district had an 8 percent enrollment increase during those years, according to the CCSD documents.
“The value of a mill still is dramatically down, by about 25 percent from 2008 levels,” Jacoby said. “So the School District continues to face a significant shortfall in local tax digest revenue despite the slight increase of 2.4 percent in the tax digest. As a result of the local tax digest revenue decline since 2008 (2008 the digest was valued at $7.8 billion; 2013 projection is $5.9 billion), coupled with state ‘austerity budget cuts,’ federal sequestration and skyrocketing State Health Benefit Plan costs to the school district, the school district continues to have to make further budget cuts.”
The CCSD’s bonded indebtedness is $407 million in principal and $232 million in interest, which was incurred for the voter-approved capital outlay program, according to Jacoby. Since 1999, the capital outlay program has funded construction of 20 schools and facilities, renovations, technology costs and additions at 12 schools and facilities, Jacoby said.
“This debt will be repaid by 2033 using Education SPLOST (Special Purpose Local Option Sales Tax) revenue in accordance with the payment plan approved by voters and included in the annual budget,” Jacoby said Monday.
In October 2012, Moody’s Investors Service downgraded the CCSD from an Aa1 rating to an Aa2 rating.
“The negative outlook reflects Moody’s expectation that the system’s reserve position will remain in the near term due to declines in the tax base, stagnant state aid and the loss of federal stimulus funds,” the Moody’s downgrade rationale read.
In September 2012, the school board voted unanimously to approve bonding $40 million in the Series 2012 general obligation bonds. Before the vote, a financial advisor told the board that the decision might lead to a reduced credit rating, but that the school system still maintained one of the highest credit ratings of all school districts in the state.
At the time, Citigroup Underwriter Bryce Holcomb told the board that the negative outlook in Moody’s rating was simply because of state austerity cuts.
Jacoby said Tuesday that the Moody’s downgrade was made because of the state of the U.S. economy, and said “the adjustment had no negative impact on existing bonded indebtedness.”
“The adjustment will have little to no impact on interest rates for and/or the success of future bond sales, as the school district still maintains what’s considered by investors to be a very attractive rating,” Jacoby said.
Jacoby said the school has a “bonded indebtedness retirement plan, which was approved by voters, and is included in the annual budget.”
“The school district’s bonded indebtedness retirement plan is funded by Education SPLOST revenue; this is separate from the budget for teaching and learning, which is funded by federal, state and local tax revenue and other sources,” Jacoby said.
Jacoby said the ED SPLOST renewal referendum resolutions outline the plan, and are on the CCSD website along with the annual budget.