Voters next week will consider a 65-cent tax-rate increase designed to counter “an unprecedented revenue drop in the Lindbergh School District,” according to Chief Financial Officer Pat Lanane.
If Proposition L is approved by voters Tuesday, Lindbergh’s total tax rate would increase to $3.81 per $100 of assessed valuation from the current rate of $3.16. But district officials say that even with the increase, Lindbergh’s tax rate still would remain among the lowest in St. Louis County.
A 65-cent tax-rate increase would cost the owner of a $200,000 home an additional $247 per year and the owner of a $100,000 home an additional $124 per year.
If approved, the tax-rate increase would generate more than $8.3 million beginning with the 2011-2012 school year.
The Board of Education’s decision to place the tax-rate increase before voters came after making $4.7 million in cuts for the current school year and roughly $2 million in cuts for the 2009-2010 school year. For the current school year, 60 positions were eliminated, including 45 teaching positions. But even with the $4.7 million in reductions, the district still faces a nearly $4 million shortfall.
During a public forum last week to discuss Prop L that was attended by a handful of people, Lanane said, “We’re talking about operating revenue for the school district. We have lost a cumulative total of $14 million (since 2007-2008) — actually, it’s over $14 million — almost all of that is the loss of property-tax money. Lindbergh is in an almost unique position in this state.
“We have probably been hurt worse than any other school district in the state because of the recession. There are really two basic kinds of school districts. Those who are heavily dependent upon state revenues through the (foundation) formula … and then they have the other districts they call hold-harmless. We are hold-harmless, have always been hold-harmless and we are 92 percent reliant on local revenues — 92 percent …,” he said, later noting the district’s assessed valuation has dropped a total of 12.5 percent over the past three years.
While the majority of local taxing districts have rolled up their tax rates through the Hancock Amendment to regain lost property-tax revenue, Lindbergh is unable to roll up its operating tax rate, which remains at the state minimum of $2.75 per $100 of assessed valuation.
He later said, “… I want to be sure the public and everyone understands that the basis of our problem is a revenue, an unprecedented revenue drop in the Lindbergh School District.”
The chief financial officer reviewed the nearly $7 million in cuts made over the past two years, including administrative cuts.
“… We’ve made administrative cuts … We had coordinators for science, math, reading, assistant principal at the middle school. We have made the hard administrative cuts,” he said. “I will tell you, we do a comparison with all the St. Louis County schools. We are the second-leanest school district in the county for administrators …”
As a result of the revenue decline and cuts, class sizes have increased and the district’s cash reserves have dwindled.
Without Prop L, Lanane said the district will have to reduce its budget by $4 million to $5 million for the coming school year.
“… Some of you may be aware — and as the money guy, I take no credit for this — but Lindbergh was named the No. 1 academic school district in the state of Missouri. If you go to schooldigger.com that ranks school districts throughout the nation, you can find that designation on there and it’s basically because of our rising test scores and where we are currently with those,” he said.
“That’s a great position to be, but we’re pretty sure we won’t be able to maintain that and that’s really what Prop L is about is maintaining what we have. We’re not looking for expansion … We’re looking at what can we do to maintain the program we have and just move it forward, not expand it really in any way — getting back to the class size we once had.”
Lanane also noted that passage of Prop L would allow the district to maintain its Aa1 bond rating and would limit Lindbergh’s ability to receive increased taxes due to reassessments in the future.
As a result, he contended people who dislike paying increased taxes should be supportive of Prop L “because if this passes, it helps that group immensely. One, it will reaffirm and shore up and keep our Aa1 bond rating. That is the highest, the best a school district can have. And it is the best they can have and it shows up whenever we have to do anything that requires issuing bonds.
“We’re going to have a sale, in fact, just in a couple of weeks where we expect because of the refunding and our bond rating to get the very best rates possible for the taxpayers. None of that money will come to the school district in terms of the savings. That all goes to the taxpayers. That will occur with that Aa1 and we think that savings will be at least $600,000 — this is on $6 million in bonds — at least $600,000 and right now today if that sale were held, it would be closer to $1 million …”
He later said, “We haven’t had an operating tax increase since 1993. Well, we’ve had to have had other income somewhere. You just can’t have operated the same. We’ve gotten it because assessments have gone up. Sometimes they went up a lot.
“Our tax rate is set because of what’s called Amendment 2. It allows any school district in the state of Missouri to have a tax rate of $2.75 per $100 … If yours is below that, you can always set it up to that. So even if assessments go up, you can still have that $2.75. No one’s forcing it down. The bad part of that is what’s happened this last three years. When it goes down if you’re at that $2.75 or below, you cannot recoup. There is no way to recoup losses …”
If voters approve Prop L, the district then would set its tax rate under the Hancock Amendment, which caps the amount school districts can collect from tax-base growth at 5 percent or the Consumer Price Index, whichever is less. At some point in the future, the housing market will improve and the district’s assessed valuation will increase, Lanane said.
“… When that happens, you will have much less volatility in your assessment and your amount of tax increases will be held to CPI — Consumer Price Index increases — and never in one year can exceed more than 5 percent. I can tell you if I went back in history, we have had four, five, six years where it was greater than 5 percent. So even someone who’s an ardent anti-tax person could look at this and say: It may not be true in one year or two years, but over a period of time I will pay less taxes if Prop L passes than if it does not because any other big increases beyond this would have to come back to the people,” he said.
“So in a very strange way, this is going to be one of the few taxes, if passed, that could result in a longer-range period of time of lower taxes than if it failed. So again, it’s a very unique situation but it’s because we now would be governed by the Hancock Amendment …”