That’s a question board member Philip McLain said he hoped to answer with a workshop on Thursday led by the department’s finance director, Brad Hale.
Hale broke down the nuts and bolts of the department’s funding in a three-hour meeting in which he outlined the inner workings of state Basic Education Program funding, taxes and other revenues that go into the department’s annual $65.8 million budget.
McLain is the chairman of the board’s Finance Committee, and said he wanted the board to have a refresher on the department’s finances. A second meeting focused on expenditures will come at a later date, he added.
“The reason for this is to educate (board members) as much as we can on where money comes from and where it goes,” McLain said. “I want them to understand one-time expenditures versus recurring expenditures.”
He added that he wanted board members to understand that recurring funds, such as raises or teacher salaries, shouldn’t come out of the department’s reserve balance.
“If we don’t bounce the revenue up a little bit, then these recurring expenses we’ve approved will keep dragging down the fund balance.”
Hale based his presentation on numbers from the FY18 budget.
A little more than half of the department’s annual funding comes from the state’s BEP funding. Based on last year’s numbers, Hale estimated that BEP funding made up about $33.8 million of the $65.8 million budget, about 52 percent.
The rest of the funding comes from $15.3 million in sales taxes (23 percent), $12.6 million in property taxes (19 percent) and $4 million other revenues (6 percent) which includes things like equipment sales, earned interest and tuition for adult education.
Half of the budget is determined by BEP funding.
On the surface, BEP funding is based on students enrolled in the system, or Average Daily Membership numbers. But under the hood, calculations for BEP funding are a little more complex.
Hale broke down the funding into four categories: Instructional salaries, instructional benefits, classroom and non-classroom funding. As an example, Hale pointed to the breakdown of instructional salaries. The state calculates an estimated $24.9 million needed for those salaries, and funds 63.55 percent of that number, about $15.8 million. It’s up to the Washington County Commission to come up with the other $9 million in funding, usually through allocating taxes.
Hale said the state comes up with its share of funding (in this case, the 63.55 percent) through their own calculations that are determined by “a county’s capacity to pay for education.”
If a county has little industry and revenues, the state’s percentage share would increase, he explained.
Average daily membership is calculated at different times during the year, and is a major driving factor in determining BEP funding. McLain noted that there are more than 40 different factors that go in to determining state funding.
The estimated average for BEP funding was about $4,000 per Washington County student last year.
|What’s the difference between ADA and ADM?
||What does it mean?
||What does it calculate?
|Average Daily Membership (ADM)
||How many students are on the roll; taken at several times during the year.
||Helps calculate BEP funding from the state.
|Average Daily Attendance (ADA)
||How many students come to class.
||Helps calculate percentages for the split of tax dollars with the city.
Taxes and the split with Johnson City
Sales and property taxes make up much of the other half of education funding. Per state law, the county has to share those taxes with Johnson City.
That calculation is derived from Average Daily Attendance, or the total days that students attend class divided by the days of instruction. The current ADA split for the county was 52.44 percent for Washington County, and 47.56 percent for Johnson City.
Hale used sales tax numbers from November to illustrate the split. Out of an estimated $321,788 generated in Washington County for the month, half of that, $160,894, is allocated for schools. The calculated ADA split earmarked $84,373 for Washington County Schools that month, and $76,521 for Johnson City schools.
Property taxes are also subject to the split.
A 40-cent property tax increase implemented in 2016 earmarked about 26 cents (equal to roughly $7.6 million) additional funds per year for the department’s capital projects.
Students moving between Washington County and Johnson City Schools can affect ADA calculations on both fronts. For example, if 10 students moved from Johnson City to Washington County Schools, that nets an estimated $27,658 in local tax revenue dollars and tips the ADA scales in Washington County’s favor slightly. Those 10 students would also bring about $40,000 in BEP funding to the county, for a total positive gain of $67,705 for 10 students.
However, the opposite is true if 10 students move from Washington County to Johnson City, and the system loses that $67,705.
Hale also noted that if both systems were to decline in enrollment, the system that declined at a higher rate get less of the tax revenues.
Hale said he wanted board members to understand the importance of student enrollment through his presentation when it comes to funding for the department.
“We need to do all we can to maintain our current enrollment and grow our enrollment,” he said.