Greenville School Board Budget

What Not To Say

By Alex Saitta

May 27, 2014

This is an article entitled, “Lawmakers rapped over school funding,” written by Ron Barrett and published in the Greenville News on April 22. The article is in black below, and my comments are in red. A couple of local websites critiqued this article when it was first published. They came down on the side of the Greenville County School Board, and faulted the legislature for turning its back on public education. That may be true, but I believe few actually realize why support from the legislature is deciling. If public education is going to boost confidence in the eye of the legislature, we first have to understand why confidence is in decline. I gave my view on that below.

Lawmakers rapped over school funding, By Ron Barnett, April 22, 2014

Money is flowing into state coffers at about the same level as it was before the Great Recession, but the (state) per-pupil funding for schools is still in the dumps ($2,120 now vs. $2,476 then), Greenville County Schools officials say.

That statistic is what it is and it is quite revealing. I believe school districts need to effectively deal with what that stat is revealing -- a dissipation of legislative support.

It seems to me these Greenville school officials think that stat indicates the legislature is uncaring or against the public school districts in our state. I personally see what that stat is revealing differently, from a more macro and long-term point of view.

First, this statistic provides supporting evidence for the observation I made, going back to the Baby Boom column of 2006. Then I described how boomers’ preferences were shifting from education to medical, and how that shift was starting to crimp public education revenue growth. That trend is continuing to unfold I believe and it is a trend affecting public education not only in our state, but across the nation.

Seniors are more likely to vote. Twenty to 50 years ago it was about their education and then the education of their children. Today, it is more and more about their medical care. Not their fault, just a necessity of where they are now in their life and legislators (not their fault either) are just responding to it.

Additionally, I think the make-up of our legislature is changing, as many newly elected legislators aren’t buying into the long-held approach of the school leaders that a lack of funding is the problem. Existing and new legislators saw how funding was increased substantially a decade or so ago, and yet academic performance has improved little.

When you look at the list of proposed bills coming out of the Senate and House, they don’t center on providing more funding for public schools, but instead most propose reforms and restrictions. For instance, the legislature is pushing for more funding for school buildings, but tying it to a voters’ referendum (restriction).

For these two reasons, and some others, the state legislature is reluctant to speed the growth of public education funding. Now the question is, what is the best way for public school leaders to deal with this new trend? Back to the article…

And if that doesn’t change it could mean a local tax increase, they say.

“We’re still not even back up to the pre-recession level,” said Jeff Knotts, executive director of finance for Greenville County Schools.

This not the way to respond in my opinion, with the knee-jerk response that angers the legislature, and alienates school boards. If the legislature doesn’t give public schools more money, the board will raise taxes and then blame the legislature for the tax hike. By the way, the Greenville School Board is looking to raise tax rates 4.9 mills — the sixth increase in seven years.

As the school board gets its first crack at the budget in a work session this morning, the district is facing a $13 million gap that will have to be filled, either by drawing money out of reserves, cutting the budget or raising property taxes on businesses, rental properties and automobiles.

The question I have is, why is Greenville’s deficit still so large? Here we are, in the fifth year of the economic recovery/ expansion. Revenue has been growing about three or four years now, and their district is still running a sizable deficit. At some point the board should have realized revenue was growing at a slower rate and trimmed spending growth and brought it down, in line, with the lower revenue growth.

Pickens County realized that a few years ago. We pushed through the criticism from the groups that always want to grow spending. The board made some tough reductions, focusing on non-classroom expenditures. As a result, our budget has naturally balanced each year since.

The version of the budget passed by the House puts the per-pupil funding level at $2,120.

“If that gets put into the budget next year, that’s funding us back at the 2002-2003 level,” Knotts said.

In the 2008-09 budget, approved before the recession hit, the figure was $2,476.

Under the Education Finance Act, the minimum should be $2,742 per student.

The legislature deserves the criticism on this. It has a formula in the EFA law that states the base student cost (BSC) should rise every year, and that BSC should now be $2,742. The money isn’t in the state coffers to fund that figure, but instead of rebasing the figure to adjust for the revenue loss in the Great Recession or changing the EFA formula to something the state can afford, the legislature ignores its OWN law. That hurts the integrity of the legislature, and officials like Jeff Knotts continue to hit the legislature over the head with it year after year.

The Senate hasn’t acted on the budget yet.

Last year the Greenville school board raised taxes by 3.9 mills and pulled $11.2 million out of its reserve fund to balance the budget. It qualifies for a 4.9-mill increase based on the state formula but could raise taxes by as much as 10 mills by using millage that wasn’t used in the previous three years, Knotts said.

Greenville’s tax base is growing, so their revenue naturally rises even when the tax rate is held steady. But they’ve raised tax rates most years, so revenue growth is even stronger.

Here are the Greenville school district’s total tax rates for 2007: 150.7 mills, 2008: 156.7, 2009: 156.7, 2010: 157.8, 2011: 162.5, 2012: 168.6 and 2013: 177.5, 2014: looking to raise operations tax rates again by 4.9 mills. From what I (me, Alex) can see, that’s a school board that can’t live within its means.

Superintendent Burke Royster hasn’t presented a budget yet but he has said he plans to call for maintaining the current class size.

The district expects to grow by about 700 students, which will require hiring additional teachers. It anticipates a 2 percent growth in the property tax base, Knotts said.

What Mr. Knotts didn’t say is much of the state funding is allocated on a per-pupil basis. Some is based on population growth. Sure Greenville has more students and a growing population, but it also receives more money for each student/ person moving into the county.

The Pickens County School Board is scheduled to give first reading Monday to its budget for the fiscal year that starts July 1, according to district spokesman John Eby.

A working document shows a gap of $263,297 between anticipated revenues and expenses, but Eby said the $105.4 million budget will be balanced without a tax increase.

Thankfully, our school district and school board got out the “blame the legislature” game a few years ago. The national economy has suffered from the Great Recession. The aftermath or this low GDP environment is the new normal. As a result, state revenue will not grow like it did in the 1990’s or even last decade. Everyone from school districts, to other government agencies to small businesses to John Q. Public, is having to make due with less revenue growth. I don’t think there is anyone to blame other than our collective nation that overspent for decades, got too deep in debt, and as a result economic growth isn’t what it once was.

On Tuesday night, the Greenville County School Board fired off a letter to members of the county’s legislative delegation urging them to live up to the terms of the 1977 EFA law.

“The State’s failure to meet this required funding formula forces local school boards to raise taxes to pay for the state mandated teacher salary increase and other educational necessities,” the letter says. “Furthermore, as a result of the General Assembly’s adoption of Act 388, it is our local businesses that are forced to bear the brunt of this expense.

I ask, instead of firing off letters, why doesn’t Greenville’s School Board just do whatever else is doing — finding ways to live within their means or income? Everyone has had to cut spending, me, you, him, that family, that business, and many government agencies.

My approach is much different than the typical Greenville board trustee because I believe the actions taken by the leaders of public schools from Columbia to local districts and boards have brought some of this on.

In Act 388 the state legislature took away about 1/3 of the tax base from school boards throughout the state, and then the legislature put those school boards on an allowance that grows by the rate of population growth and inflation. On the remaining 2/3 of the tax base, the legislature took away most fiscal autonomy by slapping a milleage cap on all boards. Why did the legislature do that? Evidently, it tired of the tax and spend policies of most local school boards.

The legislature then closed the loophole on the Greenville Plan. Why? Evidently, it didn’t like how districts went around the taxpayers and the voter referendum process, and with a simple raising of their right hands borrowed billions of dollars in the name of taxpayers.

The way I read that, curtailing board independence in those three ways, the legislature has lost much of its confidence in how school boards spend money, borrow and set tax rates. If school boards were more fiscally responsible the legislature wouldn’t have slapped those restrictions on the boards.

Next, I see the legislature isn’t running out to implement the latest initiatives from the School Board Association or the State Department of Education. Instead, it has been aggressive in creating and pressing for alternatives like virtual schools, charter schools and school choice.

None of this is a vote of confidence in the approach of boards and school districts across the state.

Public school leaders and their strongest advocates can ignore these obvious signs (the reactions of the legislature) and keep pressing on with the old playbook (see this Greenville News article), or leaders can see the old approach isn’t working, and make adjustments/ come up with a new approach. I vote for the latter, as the way to regain the confidence of the legislature.

“The citizens of South Carolina demand and deserve better.”

Act 388 created a 1 percent sales tax that was designed to replace homeowner property taxes for school operations, but it went into effect around the time the recession started and sales took a nosedive.

Act 388 has been funded fully by the legislature. When sale tax revenues fall, the state has made up the difference with general fund money.

“It has been said that, ‘When politics are used to allocate resources, the resources all end up being allocated to politics,’” the letter says.

For instance, I don’t think Act 388 was political. I think homeowners just go tired of the regular property tax increases levied by school boards around the state, and they stood up against it. The legislature agreed with their point of view. Legislators have taken some grief for Act 388, but are sticking to it.

“The General Assembly must find the will to fully fund its statutory obligation to the EFA and resist the temptation to allocate its scarce resources to new, politically popular programs if we hope to have the stable funding necessary to move our public education system forward and enjoy economic prosperity throughout our State.

“Time won’t wait as children grow fast. Please act now.”

Where are the good governance advocates on this one? Maybe shaming the legislature into giving districts more money will work (the old playbook), but I personally think it is turning off the legislature and poor governance by their board.

Senators from Greenville County couldn’t be reached for comment Tuesday.

Sen. Larry Martin of Pickens, a member of the Senate Education Committee, said it’s not realistic to fully fund the EFA because the formula doesn’t take into account the hit the state took during the recession. It wasn’t recalibrated when the revenue fell and school districts were forced to cut budgets, with many of them laying off or furloughing teachers, he said.

“Everything’s not rosy when it comes to where we are versus where we would like to be,” the veteran Republican lawmaker said. “But it’s being done based on the revenue on hand, not based on assumptions that we can’t realistically budget.”

The state’s general fund totaled $7.1 billion in 2007-08, the year the recession hit, Martin said. This year it’s expected to come to about $7 billion for the first time since then, he said.

“There are a lot of things that have suffered that we haven’t restored to what previous Legislatures said would be allocated,” he said.

Agreed. Have you seen the roads? Go drive on Shady Grove Road out of Pickens to feel my point.

What hurts Upstate school districts in the House budget, which was based on education funding reforms suggested by Gov. Nikki Haley, is that it gives more money per pupil to poor schools, Martin said.

It gives school districts an additional 20 percent per pupil for those who qualify for free or reduced lunch prices or are eligible for Medicaid.

It also would allocate an additional 15 percent for students in gifted and talented programs, Advanced Placement or International Baccalaureate courses in high schools, according to a proviso attached to the appropriations bill.

Students who don’t meet state standards in math or English language arts on state tests in grades 3-12 also would qualify for an additional 15 percent.

The Haley education bill (likely to become law) doesn’t provide much extra money, but a list of changes or reforms, supporting the point the legislature is less focused on giving public education more money, and is more focused on reforming it.

I don’t like what is going on either (patchwork changes/ reforms coming from the legislature), but this is the natural response that follows when public school leaders lose the confidence of the legislature. This article, in particular, the words and actions of the Greenville School Board, provide a good example of what not to do when trying to gain the confidence of the legislature in my opinion.

All the additional money to help schools in low-income areas, plus $30 million for reading coaches in elementary schools and $29 million for technology improvements will come from “new money” – an estimated $185 million in additional tax revenues that are anticipated – according to Rep. Kenny Bingham, chairman of the House Education Committee.

But Martin said, “That’s money that would have gone otherwise to the EFA index.”

Poverty is not a factor in the EFA formula, Haley has said. Her plan calls for funding high-poverty districts, while eliminating several “unnecessary weights and redundant programs,” and is designed to “improve equity and allow students to receive a more customized education.”