BENTON—A “perfect storm” is anticipated, reducing Benton School’s revenue steadily in the future.
The Benton School District has faced declining enrollment over the past several years and sees that trend continuing. That, paired with the increase in property value within the district, has created the financial shortfall anticipated for upcoming
In April, the Benton School District will be asked to consider allowing the school board to exceed the revenue limit in a slightly different way than the previous four referenda.
The school district passed non-recurring referenda to exceed the revenue limit for operational expenses in 2006, 2009, 2012 and 2015. In 2015, the referendum asked for $300,000 for three years. This time the school board is seeking a two-part referendum with $300,000 recurring, meaning it would be added to the tax levy permanently, and additional amounts non-recurring for the next four years, including $150,000 for the 2018-19 school year, $225,000 for the 2019-20 school year, $370,000 for the 2020-21 school year and $370,000 for the 2021-22 school year.
The board discussed the school’s needs to stay on top of maintenance repairs and technology advances and sought to have approximately $100,000 each year of the non-recurring referendum to tackle those budget priorities.
With all of the impacting factors—declining enrollment, increase in tax base and a debt payment ending—the school is anticipating a decline in revenue of $328,115 in the 2018-19 school year, $459,995 in the 2019-20 school year, $918,182 in the 2020-21 school year and $860,219 in the 2021-22 school year.
If the referendum were to pass, the school district would increase its tax rate by $1.40 the first year and another $0.75 the second year, then decrease by $2.85 the third year and another $2.18 the fourth year, based on the school’s 2017 estimated valuation of $87,094,173. The numbers were figured with no growth to the tax base those four years.
The school is currently making payments of $340,000 annually for the $3.99 million building addition and remodel project passed in 2000. The last payment will be made in the 2019-20 school year and that expense will drop off the tax levy in the 2020-21 school year. The following year the state aid is anticipated to decline by $132,600 because of the debt being paid off.
“We aren’t sure if it is possible to make it two years with the current fund balance,” district administrator Tom Andres said.
“It has been eight years since we short-term borrowed. That has made a huge impact on the school’s financial picture.”
Carol Wirth, the school’s financial advisor, explained that short-term borrowing to pay monthly expenses costs the district money because of interest charged.
The board discussed how the 2006 referendum of $575,000 over three years was directly deposited into the school’s account to create a fund balance that would eliminate the need to borrow short-term to cover regular expenses.
“We have so much to be proud of,” board president Ryan Carver said. “We had promises made and kept.”
Andres discussed how the school is in great financial shape now, because of the past 12 years of public support.
“There are many complications to the financial picture coming up,” Andres said. He noted the state aid formula tracking student enrollment over the previous three years to use a rolling average for the aid amount, meaning the school’s declining enrollment is going to continue to hurt their state aid allocations. Benton currently has 241 members and has been losing approximately five students each year based on the size of the outgoing graduating class compared to the incoming kindergarten classThe school board is preparing for that trend to continue, although they would like to also work on options and ideas to attract more families to the school district.
The 20-year debt for the school’s construction project in 2000 will be paid off in 2020 and the aid for that payment will drop off in 2021, reducing the aid by $132,600.
The board also discussed a three-year referendum, which is how it was presented in the past, versus a four-year referendum. This year, new legislation factored into the decision because schools are no longer allowed to hold special elections for referenda. A referendum question has to be posed to the public during a regular election, which only occurs every spring and every-other fall. If the referendum were to fail in spring of an odd year, the school wouldn’t have another chance to go to the public that year and would have to wait for the following spring election.
“This is actually a different situation than in the past,” Wirth said.
The board also talked about what would happen if the school dissolved and was absorbed into another school district. Wirth said Benton Schools would be an attractive addition to any school district because of its lack of debt. However, the residents would become part of another surrounding district and would take on that district’s debt. The process would takeapproximately two years to complete and might not save taxpayers any money in the end.
“This is a fantastic school,” Andres said. “I’ve seen some amazing things happening here.”
The referendum would extend the priority the public authorized in the past, adding to it to tackle some needed projects. The ballot question only gives the school board the authority to exceed the revenue limit by a maximum amount, and doesn’t automatically levy the tax. The school board will evaluate the amount needed each year and may choose not to levy the entire referendum amount each year, based on the financial factors at the time.
If the referendum doesn’t pass, the school district will see a drop in the levy because of the 2012 referendum of $300,000 for three years coming off the levy. Also, the school anticipates a decline in its revenue limit and a reduction in state aid because of declining enrollment. And the debt payment dropping off in 2020 and the state aid payment for that debt eliminated in 2021 would decrease the tax burden.
For more information, contact district administrator Tom Andres or principal Lisa Lawrence at 608-759-4002.