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Lexington One continues 2017–2018 budget process

May 15 2017

On Tuesday, May 16, 2017, during the regular monthly meeting of the Lexington County School District One Board of Trustees, Lexington County School District One administrators will present a proposed 2017–2018 general fund operating budget.

The general fund operating budget provides funding for the day-to-day operations of the district such as paying salaries, insurance and utilities, and purchasing supplies, materials and services. This is not to be confused with the district’s capital budget which funds fixed assets such as facilities and equipment. 

The first reading of the budget took place on Tuesday, April 25, 2017, during the regular monthly meeting of the Lexington County School District One Board of Trustees. The budget, as it appeared in first reading, was merely a projection. The district has made preliminary projections for revenue based on historical data, the House version of the state budget, and preliminary local assessment projections from the county.

In the first reading of the budget, Lexington One administrators recommended a $259,966,148 general fund budget — about a 6.19 percent increase over Lexington One’s current operating budget for 2016–2017 of $244,815,426.

The projected $259,966,148 in proposed operating expenditures consists of about 87.1 percent salaries and related costs, 7.8 percent for programs and services, and 5.1 percent for utilities and maintenance.

It maintains the current student to teacher ratio formula per classroom on average; includes 38.5 new staff positions to accommodate growth (29.3 certified, 9.2 support staff); includes a step increase for most employees (about $3.7 million); includes health and retirement increases (about $3.6 million); includes funding to meet state and federal requirements; incorporates an increase in accounts payable to cover inflationary increases in utilities, supplies, materials, property and casualty insurance premiums, and services (about $2.7 million); includes an increase in the amount of money the district is paying for Lexington County School Safety Officers at elementary schools; transfers allowable costs to capital funds; budgets $8.8 million from fund balance ($1.6 million more than last year); includes an 11.96 mill increase (about $3.1 million) and reduces 16.5 elementary Digital Learning Coaches in an effort to prioritize class size and ensure manageable elementary student to teacher ratios.

The state allows districts to increase millage by the Act 388 formula (the percent of growth in school district population and the CPI). For 2017–2018, that formula would allow this district to increase millage by 11.96 mills, and the district proposes adding those mills to fund the budget as it currently appears.

Since Act 388’s implementation in fiscal year 2007–2008, operating millage is not added to owner-occupied homes but is added to businesses, automobiles, etc. With an 11.96 mill increase, a Lexington One business owner with a business valued at $100,000 would see taxes increase about $72 ($100,000 X .06 percent assessment rate X additional mills). Each mill brings in about $259,294 in revenue to the district. Lexington One currently levies 305.99 mills for operations.

Lexington One’s capital millage (78.3 mills) is only five more mills than it was in 2008 when taxpayers approved the last bond referendum. Each year, because of the one-cent sales tax generated by the Lexington County School District Property Tax Relief Act, a portion of that 78.3 mills for school bonds taxes is offset by a tax credit meaning that no Lexington District One taxpayer pays the entire 78.3 mills, no matter what type of property tax.

In fact, a Lexington District One resident with an owner-occupied home valued at $100,000 pays about $117 a year in total school taxes of any kind (general fund and capital) on that home.

Budget Overview
Many things impact a school district’s general fund budget each year —  student growth, student to teacher ratios, tax collection rates, property tax relief, changes in other revenue from state and federal government, program needs, mandates such as increases in the cost of the district employee health insurance, retirement or other benefits. Here are some of the most significant things affecting this budget.

Growth
Lexington District One is the largest school district in Lexington County — geographically and in student enrollment. The district is 360 square miles (much still undeveloped) while Lexington County is 701 square miles.

The district also remains one of the state’s fastest growing school districts — growing 5,327 students over the last 10 years. The district currently serves more than 25,600 students from prekindergarten through grade 12 and continues to see significant growth in new homes along with a corresponding influx of new students. 

The district’s 5K–G12 average daily membership grew from 24,418 on the 135th day of the 2015–2016 school year to 24,894, an increase of 476 students (1.9%) on the 135th day of this school year (2016–2017). 

Administrators project a growth of 563 students (2.3%) for the upcoming 2017–2018 year.

Revenue
South Carolina’s main funding mechanism for schools is the “Base Student Cost,” part of the Education Finance Act (EFA) approved in 1977. This legislation was intended to provide each student with instruction that was appropriate for their level (primary, elementary, secondary, disability status). 

Districts continue to be funded by the state at lower levels than the Budget and Control Board’s formula recommends. According to the Budget and Control Board, the Base Student Cost in 2016–2017 should be $2,933. Instead, in this academic year (2016–2017), the BSC was budgeted at $2,350, which is below the Budget and Control Board’s 2006–2007 school year formula ($2,367). Had it been funded at the $2,933 per pupil amount it would have resulted in an additional $15.5 million in funding for Lexington District One.

In the proposals put forth by the legislature so far for Fiscal Year 2018, the Base Student Cost is projected to be $2,400 per pupil, an increase of $50 per student over this year’s BSC of $2,350 per pupil. This is still, however, under the Budget and Control Board’s recommendation of $2,984 per pupil for Fiscal Year 2018. If fully funded, the district would receive an additional $16 million.

The proposed 2017–2018 General Fund Budget is short about $4.3 million the district needs to cover the costs of state and federal mandates.

The Remaining Budget Schedule
On June 27, 2017, the board holds a public hearing before the regular monthly board meeting and hears the third reading of the 2017–2018 general fund operating budget during the regular monthly board meeting.

Important Links
04-25-2017 Budget Presentation