If you have driven by Alcovy High School lately you've seen the front drive and area near the tennis courts dug up while heavy equipment litters the area. Some of you may be wondering why a 2-year-old school is seemingly under construction again. The answer is quite simple. The county didn't have the funds to complete what architects planned years ago.
It's no secret the United States is on the brink of a recession. After years of steady fuel prices and a stable economy, the dollar is underperforming and fuel prices are approaching hyperinflation.
Closer to home, Newton County has seen steady growth. Since 2000, the population has risen 55 percent, from 62,000 to 96,000. On the outset, that looks good. But the economy has not kept up with the population growth, causing every agency, including the Newton County School System, to pay close attention to their spending.
To operate any business you need money, and make no mistake about it, running a school system is big business. Operating funds come from two primary sources - local ad valorem revenues and state sources. But lately, state funding has been short.
Every year Assistant Superintendent for Administration Deborah Robertson works with Superintendent Steve Whatley and their support staff to draw up a feasible working budget. As fiscal year 2007 comes to a close, the county presented the 2008 budget at last month's Board of Education meeting and has held several work sessions before the board votes it into law this week. But what seems to be a reoccurring theme, the state once again has shorted the district more than $1.5 million.
The majority of operating revenue the district uses comes from the states Quality Based Education Act of 1986. The state uses a complex formula to calculate what each county district receives based on student enrollment. Part of the state's money is derived from federal funding - roughly seven percent. But the state continues to short the school districts.
Since 2006, the state has made more than $6 million in austerity cuts. That's $6 million in money the county earned as a result of their student enrollment. But Newton County isn't alone. The NCSS is one of 180 school districts in the state that finds itself on the short end of the stick when it comes to QBE funding.
State senator John Douglas (R - Social Circle) served on the BOE before his time in the senate and knows first hand what the school system faces with budget constraints.
"The state is required to operate with a balanced budget," Douglas said. "The Governor cannot propose a budget that would be out of balance. As a result, he cuts revenues in several areas including education."
While the state makes cuts to other services, school districts must find a way to make up for lost revenues. This is where local funding comes into play.
As a rule, most school district's budget are weighted roughly 60/40, state versus local funds. This year's budget reveals that the county will receive roughly $52 million or (40 percent of its operating revenues) from funds raised by ad valorem taxes. Taking away ad valorem, which many uniformed tax payers may want to do, would effectively handcuff the school district's operating budget.
Whatley asked the board to approve this year's millage rate at 19.21, with one mill going toward debt services. That leaves 18.21 mills for operating revenues. Even though the county could increase the millage rate, county officials take into account the state of the economy and public perception. As a result, the millage rate has not changed since 2006.
Along with the QBE cuts, fuel costs have taken a toll on the school district. Consider this. The county purchased fuel in May for an average cost of $3.88 a gallon. That's an increase of 30 cents per gallon over fuel purchased in April. As recent as last week, the county paid $4.17 per gallon. When officials drew up the 2008 budget, they took in account $3.50 per gallon when calculating transportation costs. A quick look at the math shows they are already looking at a deficit in transportation costs.
Robertson says the state allows the county to move around 5 percent of its operating revenues to offset costs such as rising fuel prices. But robbing Peter to pay Paul can only go so far. Considering the costs have already risen 67 cents and the district isn't even operating on FY2008 funds, it's clear Robertson and her staff has some work ahead of them. While $1.5 million may sound small compared to an operating budget of nearly $162 million, it surely would help offset the rising transportation costs.
It seems like everyday is a record day for fuel prices and why not? When you're in uncharted waters, everyday is a new day. Even once stalwart icons like General Motors have been forced to rethink their business strategy. Recently GM, which is the fifth largest company in the world, announced the cessation of four production plants that build trucks and SUVs. Newton County's School System is no different.
Over the past several months, in the wake of rising transportation costs, school officials have been forced to rethink their bus system. During the school year, officials asked principals to limit filed trips and reevaluate long distant sporting trips. Additionally, the costs per student for filed trips will rise next year as part of the proposed budget. The proactive approach has helped, but fuel prices continue to outpace the district's efforts.
With this year's budget 92 percent complete, the county has already reached 100 percent of its available balance for transportation expenditures. Fortunately the system receives a yearly midterm adjustment from the state and that will cover the additional costs. Still, the county will hold its collective breath that fuel prices level off in the near future.
The other variable that works into the county's financial infrastructure is the special-purpose local-option sales tax or SPLOST which the county uses primarily as funds to build new schools and make additions and improvements to existing buildings. Georgia currently has a four percent sales tax. Above that, county governments can add a SPLOST for road and infrastructure maintenance or in this case education. As it stands, one percent of all sales tax collected in Newton County goes to the education SPLOST fund.
The county outlines projects over a five year period for each SPLOST term. Part of the balancing act for county officials is planning the use of each SPLOST while projecting revenues, something that a weak economy has turned into a crapshoot.
Making things tougher, Newton County ranked as the 15th fastest growing county in the U.S. While that may sound good for the local economy, neighboring Rockdale County still holds the upper hand on retail and restaurant locations. Conversely, Rockdale didn't even crack the top 100 in percentage growth according to the U.S. Census Bureau.
"Everyone wishes Newton County residence would spend their money in the county but Rockdale has a much higher SPLOST fund as a result of the amount of places you can go," Robertson said.
Economics can be a self fulfilling prophecy and SPLOST is no different. The most fundamental economical principal says citizens are better off spending locally. And while the addition of the new Wal-Mart Supercenter and Home Depot have helped, Rockdale County still has many more options for local residents to spend their hard-earned money.
Things may be turning around. On Friday oil prices dipped below $135 a barrel and OPEC has questioned whether prices can remain so high. The dollar also gained against the Euro suggesting that the high gas prices may have squeezed demand to the point where the price point may soon drop.
Despite the country's national debt, local governments strive to operate on a strict budget. Douglas understands first hand as he a former chairman on the NCBOE
"We'd like to spend more than we do but money is finite," Douglass added. "But austerity cuts go throughout the state and Newton County, like every other district has shoulders the load"
Even though money is tight, the county still manages to operate in the black. Robertson keeps the board and Whatley updated on expenditures daily and as a whole, the county usually ends the year with a surplus of funds they in turn use to begin the next fiscal year. Like a wise investor, the county tries to have a reserve, albeit small, just in case.
"We try not to spend any of that money we have and allocate that as the beginning balance for the next year's budget," Robertson said. "As it is, it isn't even enough to pay for month's worth of operating expenditures."
Overall, the county spent on average, $7,855 per student in 2007. That's good compared to the state average of $8,428. The majority of the remaining costs for this year are teachers' salaries. But looking ahead, the county and state for that matter can only support what the economy dictates.
"It's a tough economic time right now," Douglas said. "The budgets are bare bones as it is and Newton County does an excellent job. They spend every penny wisely and have always been very careful with tax payer's money.
