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The Shelby County Board of Education reviewed a draft budget last Thursday night that projects only modest gains in revenue for the district and a decrease in expenses.
According to the draft, lower interest rates and a decline in reimbursements from last year's expenses are expected to result in limited overall growth in local revenue.
Dr. Bob Arvin, the district financial consultant, said cuts to the federal interest rates have hurt the district's income. He said further cuts to the rate could increase the loss.
The district expects to receive $300,000 less this year from its investments because of rate cuts. Last year investments generated $1.1 millon. This year the district anticipates $837,500.
By state law, every local board of education must receive and review a draft budget before Jan. 31 for the upcoming school year. The purpose of the law is to ensure that the board has sufficient information about all of the projected receipts and expenditures for the upcoming year.
The number of expected students and a projection of assessed value of taxable property are the two factors that determine the expected local and state revenue.
The district expects to see an increase of 127 students next year and a 3 percent increase in taxable property, which would bring the value of local property subject to tax to just over $3 billion.
While the district income for investments may decrease, the district expects to see a 3 percent increase in property tax revenue and an 8.3 percent increase in utility tax revenue.
The two taxes will likely generate close to $700,000 for the district.
With local, state and federal monies, the district expects to take in $39.3 million dollars next year into the general fund. That is a $437,810 increase from last year, which Arvin called modest compared to years past and considering the growth in student population.
While the gains may be modest, the district currently plans to spend $155,694 less this year; however, that number is likely to change.
Currently, other than annual salary increases, the draft budget does not include any salary increases.
District Finance Coordinator Greg Murphy said salary increases are typically allocated later in the budget cycle. He said in recent years the state legislature has mandated salary increases and have dictated how the school boards should increase pay.
Other parts of the budget are also currently uncertain.
If the General Assembly passes a budget that has cuts to the education general fund, it is possible that $430,000 could get cut from Shelby County piece of the state pie.
In his speech last night concerning the budget, Beshear said SEEK funds, which make up the majority of funds that districts get from the state, will not be decreased.
"So, while most of the rest of government will have to make do with significantly less, this budget provides the funding to maintain the SEEK base per pupil guarantee for the next two years," he said.
He did not, however, mention what may happen to the general budget.
The state budget is usually not approved by the General Assembly until the final days of the regular session. Therefore, it will be the first week of April before state revenue is known.
Murphy said the district has always tried to compose a budget that is fiscally conservative and with budget cuts possible coming for the department of education, the district's fiscal responsibility may come in handy.
The district is required to have a reserve of 2 percent of the total budget.
Currently the district has $4.2 million in reserve.
Arvin said the reserve could be used to maintain the programs the district offers - programs they would likely have to cut if they did not have the reserve.
The budget will continue to undergo changes until the fall.
The Shelby County school system revealed its draft budget last Thursday night. The following are the projected expenses from the general fund.
Salaries personnel services: $31,857,847
Employee benefits: $2,140,033
Professional, technical services: $606,687
Property services: $714,685
Other services: 463,922
Supplies and material: $3,290,403
2008/09 General fund total: $40,271,903
2007/08 General fund total: $40,331,899