Pictured above: Mehlville Board of Education member Jean Pretto and CFO Marshall Crutcher discuss the 2020 budget during an insurance committee meeting June 5, 2019 at Mehlville High School. Photo by Jessica Belle Kramer.
By Erin Achenbach
The Mehlville Board of Education will consider rolling back tax rates when it meets for its annual tax-rate hearing Sept. 24, due to a larger-than-expected increase in this year’s assessed valuation.
The board will meet to set the tax rates at 6 p.m. Tuesday, Sept. 24, at Bernard Middle School, 1054 Forder Road. Members of the public will be able to sign up to speak during the tax-rate hearing.
Following the tax-rate hearing, the board will have its first listening session of the year, a “Mehlville Listens” Board of Education listening session on the strategic plan.
The board will consider a recommended blended tax rate of $3.74 per $100 of assessed valuation, a decrease from the 2018 blended tax rate of $4.15, according to the projected tax rates published in this newspaper. The blended rate is not levied.
Assessed valuation, which was not set to be finalized and released until Sept. 16, grew 13.7 percent in the district, while the consumer price index went up 1.9 percent. Not counting new construction, assessed value increased 13.3 percent. Projections had that number growing by only 8 percent. Under the Hancock Amendment, that means the district has to roll back its tax rates so that the district doesn’t get a tax increase without voter approval.
The inflation rate from the consumer price index, 1.9 percent, is added in to the rollback to help make up the difference in year-onyear revenue from rolling back the tax rate. However, because the assessed value is not yet finalized, if the assessed value increases more, tax rates will decrease for net zero revenue impact and vice versa unless the assessed value percentage falls below the CPI.
The Mehlville Board of Education unanimously approved a $124 million 2019-2020 budget in June, since state statute requires that school districts pass their budgets by the end of the June 30 fiscal year. As passed, the 2019-2020 budget projects total expenditures of $124.4 million with anticipated revenues of $123.8 million. The proposed budget carries a $623,000 deficit. The operating funds, which account for the day-to-day spending in the district, have a surplus of $1 million. Non-operating funds used for debt payments had a $1.7 million deficit due to planned debt payments.
The total revenue for the district is divided between the district’s operating funds and non-operating funds, or capital money. The 2018-2019 budget projected total expenditures of $121,383,000 with expected revenues of $121,712,000.
But unlike past years when the district had a deficit in its operating funds, Chief Financial Officer Marshall Crutcher said this year’s deficit is misleading because the capital funds it is spending over revenues have been collected in previous years with a plan to spend them this year, and it is “merely a timing issue of collecting revenue in smooth, even increments.”
Prior to the approval of the 2019-2020 budget, Crutcher had been presenting budget previews and updates to the Board of Education since January. There were no significant events that impacted the budget this year and “to a large degree, it’s just a continuation of last year’s budget,” he said.
At one of those budget previews, he said finances are solid.
“We’re in a strong financial position. The cash reserve is in the 29-percent area. It looks like our next few years we’re expecting to have solid cash reserves and paying off COP (certificates of participation) debt,” said Crutcher. “That’s a strong position to be in. We’re in a nice, sound financial position.”
Superintendent Chris Gaines echoed similar sentiments as Crutcher in an interview with The Call, agreeing that the district was in a stable financial position. However, Gaines cautioned against viewing the approved budget as the end all, be all, since finalized assessed values and tax rates could alter finances.
“We have to have a budget by June 30 but we don’t know our tax rate… and we don’t know our assessed value until almost 90 days into the school year. It’s just a weird calendar. People are like, ‘You’re off from your original budget.’ Well yeah, we don’t know precisely exactly what our assessed value and tax rate is going to be. It’s all based on estimates,” said Gaines. “That’s why a budget is kind of a living document. Usually at the end we’re within a point, point and a half of where we thought we were going to be in the beginning. A 98.5 gets you an A in like every class in school.”
Some key takeaways for the current school year include an operating surplus of $1.1 million and a 29.5-percent cash reserve.
Revenue increases by 1.7 percent, or $2.1 million, compared to historical trends of 1.45 percent. Expenditures increase 2.5 percent or $3.1 million, compared to 2.3 percent in historical trends.
Salaries and benefits make up 72 percent of total expenses and increase by $3.1 million or 3.5 percent. Certified salaries of teachers account for 77 percent of total salaries, and teachers are budgeted for one step, channel changes and a $777,000 salary restructure. Classified staff are budgeted for one step, plus a $190,000 salary restructure. Administrators received 1.8-percent raises.
Supplies and services account for $19.1 million of total expenditures, down $63,000 from last year. Among those costs, $152,000 accounts for the early college program ($25,000), election services ($70,000), demographer updates for enrollment projections ($35,000) and the early childhood special education bus lease renewal ($22,000), which is fully reimbursable.
Capital expenditures, $4.2 million of total expenditures, are down 15.5 percent from last year and include six buses, three vans, a new information-technology firewall and facilities projects like HVAC, roofing, windows, ceilings, elevator upgrades, asphalt, transportation, fencing, bleachers and baseball fields.
As for other expenditures, the health insurance expense is $8.4 million. Rates have not changed since 2015 and won’t in 2020.
Debt payments total $11.8 million, an $866,000 increase from last year’s $10.9 million.
The district will pay debt on three COPs this year. Four will remain, with three set to be paid off in 2021 and the last in 2022.
Total budget revenue is up $2.1 million from last year, a 1.7-percent increase. Local tax revenue for 2019-2020 is projected to be $75.2 million, a $1.7 million increase from last year