Lexington County School District 1 is raising taxes, but it’s reaching into its general fund balance to mitigate the amount.
At its regularly scheduled Aug. 15 meeting, the district’s Board of Trustees voted 5-1 to use $22.6 million of their general fund balance to keep from raising taxes further after installing a $102 increase in houses valued over $100,000 and a $31 increase in cars valued over $30,000 in June.
Chris Rice was the only board member to vote no, and Mike Anderson was absent.
“This budget was challenging as new state revenue only covers 36% of new state mandates, plus the impact of rising costs and inflation that everyone is dealing with,” Board Chair Anne Marie Green said in a statement to the Chronicle, explaining that this gap in state funding forced the district to either raise taxes further or reach into the general fund balance. “Fortunately, good fiscal management over the years enabled us to draw on our fund balance to cover much of the shortfall.”
“Raising millage is always a last resort because we understand the impact it has on our local businesses,” she added. “We were mindful of this as we considered what is a necessary, appropriate, and minimal-as-possible millage increase.”
Jennifer Miller, chief financial officer for the district, told the Chronicle that using the fund balance is a temporary solution for the district as it is not a recurring revenue stream. She added that once the balance is used up, the district will need to find a permanent solution to balance future budgets or they will have to consider budget cuts.
The approved tax increase will not impact a homeowner’s primary residence, but will be applied to businesses, vehicles and boats.
The increase, the first for the district since 2019, would bring in nearly $5.8 million for the district.
The bump in taxes was installed as part of a 2023-24 budget that totals more than $364 million, up from about $326 million last year.
The Aug. 15 meeting provided insight to the three big unknowns mentioned by Superintendent Gerrita Postlewait in June – those being how much money the district will get from the state, where the district’s year-end fund balance from the previous fiscal year will land, and the district’s enrollment numbers for the upcoming year.
According to Miller, the district adjusted its projection for how much state revenue based on student enrollment being lower than expected.
“Student enrollment counts from the first few days of school in August were lower than the enrollment numbers we projected for the 2023-2024 school year back in June,” she said. “The state will not adjust revenue based on this year’s student enrollment until after the 135th day of this school year.”
Miller said the district lowered the state revenue projection ahead of time to avoid making mid-year budget cuts.
When the district approved the budget in June, the state hadn’t finalized their budget amounts, Miller told the board at the Aug. 15 meeting, reporting that the district was now projected to receive $7.3 million of its anticipated $15 million from the state.
At the same time, the district did have a good year when it came to local revenue, with Miller reporting at the meeting that the district now projects to bring in $11.9 million, up $3 million from the previous projection. She said the increase was particularly stark when it came to vehicle taxes.
The district has taken other measures in response to the new revenue formula, which put pressure on the district, as did the end of pandemic-era funding and expenses incurred during the pandemic, by strategically repurposing jobs and programs within the district. The district repurposed more than $3 million by doing this.
Some jobs repurposed include elementary librarian assistants, high school librarian assistants, help desk coordinators, central service administration, digital learning coaches and elementary interventionists.
Miller explained in June that these changes were also in response to new state requirements for educators to have 30 minutes of unencumbered time during the school day, adding that no employee lost their job or experienced a pay decrease as a result.
The district also removed three programs – the computer science immersion program, a staff position associated with the alcohol and drug abuse authority LRADAC, and the Lexington 1 Online Learning Academy.
Green said that the district’s budget is 90% personnel costs, and that when sufficient revenue is not allocated to cover that, the board is given three options: transferring from fund balance, raising millage or cutting staff.
“We approved a budget that prioritizes student learning and wellbeing by holding student-teacher ratios steady and raising salaries for all staff to ensure we have high quality personnel in every role in our schools.” the chair said in her statement to the Chronicle.