Financial Update 2014

Public hearing on 2014-15 tax rate set for Sept. 11

The Oldham County Board of Education will host a public hearing on tax rates for the 2014-15 school year.

Date: Thursday, September 11, 2014
Time: 6:00 p.m.
Location: Oldham County Schools Arts Center

Click here to download  Financial Update 2014 Packet  -PDF

Click here to download  Tax Rate by Levied Type  2007-08 through 2012-13  -PDF


Finance Modules - http://www.youtube.com/playlist?list=PL-QxCpPbvB4fQr_PW8XiL71Ls-v834x8W 

 
 Module 1 - http://youtu.be/3DPyCeMtHWk  Module 2 - http://youtu.be/5wubPJLqc0o
   
 Module 3 - http://youtu.be/qQ-pfl77AkQ  Module 4 - http://youtu.be/0rp3jScqQ68

Budget FAQ 

We've compiled some common questions about the budget. Still have a question? Let us know! 

Funding sources include 43 percent from local property taxes and about 52 percent from the state in 2013-14. The remainder comes from federal funding, which pays for specific programs that support students and staff.

Despite mounting obligations that cost us both time and money, we receive less state SEEK funding than all but 20 other Kentucky school districts. That means we rank 152nd out of 173 districts in terms of our primary source of state funding.

Our 2013 tax rate of 73.4 cents is required to be split between our general fund and building fund. Of that amount, 51.3 cents goes into the general fund and 22 cents goes to the building fund (the remaining .1 cent is for exonerations and also goes to our general fund but is tracked separately by the state). We rank 54th in terms of the amount collected for our general fund.

Our expenses increase by about $1 million every year because of salary and benefit contributions required by the state but funded locally. Other mandates, like Senate Bill 1 “Unbridled Learning,” increase expenses through necessary training and implementation.

We pride ourselves on being good stewards of the public’s money. We intentionally look for ways to reduce expenses while protecting our classrooms as much as possible. Ensuring the learning of every child remains our top priority.

Oldham County Schools is a top-performing district in efficient use of funds. This is based on two independent studies (2010 by the American Progress Institute and 2012 by the Bluegrass Institute) that compared the revenue available and results achieved based on measures of student learning. The “Bang For Your Buck” report by the Bluegrass Institute ranked Oldham County as the fifth most efficient district in the state — and the largest district by far in the top 10.

Last year, the district cut spending by $3 million by making reductions across all areas. About 85 percent of our general fund spending goes toward salaries and benefits. In order to drastically reduce spending, personnel cuts were made in many areas including eliminating 30 teacher positions.

We have also used contingency funds to pay down bus purchase debt, saving the district $200,000 in interest and making nearly $600,000 available in cash flow.

The district is a national leader in energy efficiency and works hard to ensure we are keeping those costs down. The district has 12 Energy Star Certified schools, 7 of which scored a 90 or higher. This distinction puts our district in the nation's top 10 for energy efficiency.

We are pursuing outside funding through grants and partnerships to fund special programs. These include Camp Literacy Live, the Reading Academy and the OCS Engineering Academy. In 2014, we have secured more than $121,000 in outside funding for those specific programs, plus additional funding for other projects. Many of these donations are solicited by the Oldham County Educational Foundation on our behalf. This year OCEF will double its contributions to $200,000. Learn more at www.ocef.info.)

100 percent of the school tax you pay stays right here in Oldham County — it comes directly to us, it doesn’t go through the state or get shared with any other district. Your dollars go to your students.

Last year, the district cut $3 million in spending. We also made significant cuts from 2008-2011 totalling about $2.2 million. With so little spent on administration and so much spent on compensation, the only thing left will be to cut teachers and programs. Programs like GATES, the Engineering Academy, the Arvin Educational Center and Reading Recovery could all face reduction or elimination.

The board of education did raise taxes last August (2013) — for the first time in four years. In the past decade, there have even been two years when the board lowered the rate.

Compared to 10 years ago, the school property tax rate is 6.4 cents higher. That's $64 per $100,000 of property value.

Salaries for teachers and classroom support staff are the focus of a tax increase in 2014. Our staff deserve to be compensated for their hard work and for the demands new state mandates put on them and their families. The revenue generated will be used to give a small raise to all staff, but the majority of the funds will go directly to teachers and classroom instructional staff.

This year, our teachers will begin the state’s required Professional Growth Effectiveness System, a different evaluation process than what our district previously used. This state-mandated system will require them to spend additional time submitting reports and paperwork to the state department of education. Teachers will have to spend more of their personal time completing this mandated burden as well as continuing their work ensuring the learning of every child.

And, in order to continue attracting the best teachers to educate our students, our salaries must competitive with neighboring districts. We are lagging behind many nearby counties, including Shelby, Jefferson and Bullitt.

All school tax money paid by the Oldham County property owner stays in Oldham County. Our school tax dollars go directly to our children. It doesn’t go through the state or get shared with any other district. Your dollars go to your students.

According to 2013 audited reports available from KDE, Oldham County Schools' district administration category expenditures total $1,573,755. With our general fund expenses (lines 1000-3900) at $104,105,297, about 1.5 percent of our general fund budget was spent on administration. The state average is about 2.27 percent. Per pupil, we have the 12th-lowest administrative expenditures in the state. However, it is important to note that all districts include the same expenses under this category. (This data is publicly available on the KDE Open House site.)

Since the county began rapidly growing in the mid-1990s, the district has acquired parcels of property in anticipation of future needs. Some of those acquisitions have come through donations — developers and residents can receive tax benefits from doing so and can also help support the district's future.

The district has not purchased any property since 2010 after it purchased the 18.5-acre Button Lane parcel that is now the Administrative Annex and bus compound.

In summary, the district owns about 783 total acres of land. About 256 acres are currently vacant, including 75.74 donated acres. The district is tax exempt and pays no property tax on any of its property. Plans for several parcels include expansion of the East campus and construction of the Brownsboro campus at such time the district’s enrollment warrants those projects.

The board of education has on-going discussions about the potential sale of property it owns, keeping in mind that sale proceeds would be one-time funds and shouldn’t be used for recurring expenses like salaries.

Click here for spreadsheets detailing the property owned by the district

The board of education levies four “nickels” on property taxes. These are additional 5-cent property taxes that go into the building fund and are included in the total school district property tax.

One of these is required if the district wants to participate in state funding programs for buildings, the School Facilities Construction Commission and the Facilities Support Program of Kentucky. All public districts in Kentucky currently levy this amount.

Two “nickels” are related to growth, and the district meets state requirements to levy these amounts. The fourth nickel is related to building needs and was subject to recall when enacted.

The board of education continues to levy these four nickels because that funding is needed to pay the existing debt service and maintain facilities. If we were to reduce the number of nickel levies, the district would quickly not be able to meet building-related expenses, including debt service, maintenance, renovations and new construction.

Unfortunately, it’s also not possible to just “move” a nickel amount to the general fund — if we eliminated a nickel but wished to increase the general fund portion by that amount, it would exceed the maximum the board of education can raise tax rates.

You can learn more about the nickel taxes here:

KDE Nickel Facts  (http://education.ky.gov/districts/SEEK/Documents/Nickel%20Facts%205-1-2013%20(3).doc )

The state requires a designated amount be delegated to the building fund. Building funds pays for the existing debt service, primarily for schools built during the district’s population boom. It also pays for renovations, maintenance and new construction. The district can apply to transfer money from the building fund into the general fund, but it must be approved by the state. That practice has to be included in the state biennial budget, so we cannot assume we will be able to apply for those transfers in the future.

Contingency funds are one-time revenues and should not be used to pay for recurring expenses. That would be like paying for your mortgage from your savings account. Eventually, you’ll be out of savings but your mortgage payment will still be due.

A better use for one-time funds, including contingency funds, is to pay off debt. Doing so saves the district from paying additional interest on the debt, and also makes more general fund dollars available to pay recurring expenses. The board chose last year to exercise this option, paying off debt from bus purchases, saving $200,000 in interest and making $600,000 additional available in cash flow.

A number of entities levy property taxes — there are about 17 different groups who collect property taxes in Oldham County, including fire departments, the health department, the library and municipalities.

For the school district, the board of education sets the rate each fall, usually in early August or late July. The Kentucky Department of Education gives the board several options to consider and estimates the amount of revenue those rates would generate. One option is always the “compensating rate,” which sets the next year’s rate at an amount that will generate the same amount of revenue as the preceding year.

School boards across the state set the tax rate annually. They can choose to keep rates the same, decrease them or increase them so that the revenue generated is increased by 4 percent. Any increase above the 4 percent amount is subject to recall. A proposed increase of any amount requires the board of education to hold a public hearing, this year Sept. 11 at 6 p.m., at the Oldham County Schools Arts Center. You can also share your opinion with your board member before that meeting.

The Oldham County Property Valuation Administrator, a locally-elected official, assesses property value annually. Each property is assessed every four years. Your property taxes are calculated based on this assessment.

Currently, the board of education has set the property tax rate for the school district at 73.4 cents per $100 of property value. That means for a home valued at $100,000, you will pay $734 in property taxes to the school district. The recommended tax rate of 76.5 is $31 more per $100,000 — dollars that will stay right here in Oldham County classrooms.

The county and other entities also tax your property, but we do not receive those funds. http://apps.auditor.ky.gov/public/theregistry/TheRegistry.pl?county=Oldham

Every member of our community plays an important role in the education process — and it is our goal that each of our students becomes an important, contributing member of the community.

All revenue generated by local property taxes by the school district stays right here in our school system — 100 percent of it gets invested into the services provided to the students of our county. Oldham County is recognized for many wonderful qualities; foremost among these are our schools. Homeowners who pay property taxes are investing in our schools which, in turn, helps ensure strong property values for Oldham County residents.

It’s a vital cycle — investing in our students ensures a vibrant, thriving future for Oldham County.

In addition to developing the next generation of Oldham County residents — and we certainly hope our students choose to live here as adults — our school district is a smart investment in everyone’s future.

 

When people think of Oldham County, many think of our schools — consistently high-performing, but just as consistently one of the state’s least-funded districts. Nearly half of our funding comes from local tax dollars — our residents are our biggest investors.

The state is required constitutionally to fund schools equitably and adequately — but Kentucky legislators received an F in educational funding in a recent Education Week report titled “Quality Counts." This shifts the responsibility to school districts, placing local boards of education in the difficult position of having to watch the quality of their schools decline because of constant cuts, or make the bold — and unpopular — decision to raise taxes in their community.

While our mission is to ensure the education of every child, we also know it is paramount that we be good stewards of tax payer dollars. This year, we saw the success of last year’s spending reductions on balancing our budget and are ending our reliance on our contingency fund to pay for recurring expenses. We’ve also increased our efforts to secure outside funding to pay for special programs. This past year we also made the decision to pay down debt from previous bus purchases, which is saving the district nearly $200,000 in interest and increasing our cash outflow by almost $600,000.

However, this will not be enough. While our fiscal outlook looks promising for this year, unfunded state mandates will increase our expenses greatly in fiscal year 2016, enough so that it is doubtful even a large tax rate increase next August would make up the deficit. Thse unfunded mandates are part of why Kentucky's legislature received an F in the Education Week report.

Our teachers deserve a raise. They deserve to be compensated for their hard work and for the demands new state mandates put on them and their families.

And, in order to continue attracting the best teachers to educate our students, we must pay a competitive wage that keeps them here. We are lagging behind many of our neighboring districts, including Shelby, Jefferson and Bullitt.

Our best investment is our teachers, and ensuring every teacher is as good as our best. And, we believe being proactive about the budget and our revenues is in the community’s best interest, as well as the best interest of our students, who are best served by us being able to predict what class sizes and programs will look like when this school year ends. For that reason, we are recommending the board pass a rate increase that would allow us to meet our obligations next year without having another round of spending cuts. We’ve provided some information we hope will encourage you to support an increase.

  • We receive funding from three key revenue streams: local (43 percent of funding), state (52 percent) and federal (5 percent) sources.
  • Oldham County receives less state funding than almost every other district — less than all but 20 other Kentucky school districts, or 152nd out of 173. The primary source of state funding, SEEK, allocates less to OCS because the district has fewer students with costly needs. 
  • The state provides just over 50 percent of our revenues, despite mounting obligations that cost us both time and money. 
  • A portion of the local tax revenue generated must be set aside for the building fund per state law. These funds are used to pay the debt service on existing building, as well as pay for renovations, repairs and new construction. 
  • A number of entities levy property taxes — there are about 17 different groups who collect property taxes in Oldham County, including fire departments, the health department, the library and municipalities. 
  • Kentucky boards of education can raise taxes up to an amount that would yield 4 percent more revenue each year without a referendum — that’s 4 percent more revenue, not a 4 percent higher rate. Any proposed increase requires a public hearing. 
  • Oldham County property assessments continue to decline, although new growth is increasing. 
  • Last year, OCS was joined by more than half of Kentucky districts that adopted a tax rate increase that would yield 4 percent more revenue. This is a sign that decreased state and federal funding, additional unfunded mandates and mounting expenses continue to sap district coffers and negatively impact student learning.

  • Homes in highly-regarded school districts command a premium when being sold — as much as 11 percent, according to a 2010 study published by the Federal Reserve Bank of St. Louis Review. The study found that homes in a district with test scores 5 percent higher than average sold for $16,000 more. 
  • Oldham County Schools’ “return on investment” — or “bang for your buck” — is at the top among all other districts. This is based on two independent studies (2010 by the American Progress Institute and 2012 by the Bluegrass Institute) that compared the revenue available and results achieved based on measures of student learning. 
  • Our expenses increase every year in ways we can’t control by about $1 million, primarily through salary step raises and benefit contributions mandated — but unfunded — by the state. Other mandates, like Senate Bill 1 “Unbridled Learning,” increase expenses through necessary training and implementation. 
  • Without an increase in revenue, we will have to further reduce expenditures by cutting more teachers and eliminating programs ahead of the increased expenses in the 2015-16 school year.

Click here to download  Financial Update 2014 Packet  - PDF
 

Oldham County Schools Logo               6165 W. Highway 146      |     Crestwood, KY  40014    |     Phone: 502-241-3500     |     Main Fax: 502-241-3209