Carmichaels Area board to consider budget maneuver

CARMICHAELS – Carmichaels Area School Board plans to approve an early preliminary budget that will allow it to increase property taxes this year in excess of the inflationary index established by the state’s Taxpayers Relief Act.
District business manager Amy Todd said this doesn’t mean the board plans to increase taxes this year in excess of the index, however, and that the board has made no decisions regarding the 2015-16 budget.
But approving an early preliminary budget, as required by the act, “does give the board the ability to explore exceeding the index” should it think that is necessary, she said.
“I don’t know if the board will or won’t (increase taxes),” she said. “But it gives them the option to make that decision.”
The district’s index for the year is 0.8 of a mill.
For the district to increase taxes in excess of that amount, it is required by the act to approve a preliminary budget in January and either receive exceptions from the state Department of Education or have the proposed tax increase approved in a voter referendum. The board plans to approve the preliminary budget at its regular monthly meeting on Jan. 21. It does not intend to seek approval through a voter referendum, but will seek exceptions from the state, Todd said.
Exceptions are granted to districts facing additional costs as a result of retirement contributions, special education expenditures or for debt payments for school construction incurred prior to 2006, the date of the act.
Todd said the district would seek exceptions for both special education and retirement costs. The district’s special education costs have continued to increase each year, Todd said. Two years ago, the costs of the services jumped by about $100,000, she said.
Retirement costs under the state’s school retirement system have jumped tremendously in the last few years, she said. For the current year budget, the district paid 25.84 percent of payroll into the state retirement system. That is expected to increase to 29.27 percent this year, Todd said.
The jump in retirement costs last year resulted in the district paying an additional $300,000 for retirement benefits, an amount representing almost 2 mills in the district, Todd said.
The Department of Education will review the district’s request for the exceptions, and if it approves them, will determine how much the district can increase taxes.
Todd said she was still preparing information for the preliminary budget that will be considered by the board this month.
She said she didn’t know at this point whether a tax increase would be needed this year, though the district has seen increases in costs each year and a decrease in state funding.
The district has had to use some of its fund balance each year to balance its budget and though the fund balance remains healthy, the district’s reliance on the funds can only go on so far, she said.
The board last year increased property taxes by 0.65 of a mill, the amount permitted by the state index. The additional revenue was earmarked to pay off bonds for the school renovation project.
Last year, Jefferson-Morgan School Board increased taxes in excess of the index after receiving an exception from the state for its high retirement costs. The board does not plan to increase taxes in excess of the index this year, acting Superintendent Craig Bailey said.