Lowndes County School District’s board met Tuesday to declare a more than $3 million shortfall in local revenues for the 2021 Fiscal Year.
The shortfall represents the difference between the amount the district requested from county supervisors in local taxes for the fiscal year and the lesser amount supervisors approved LCSD to receive. By declaring a shortfall prior to June 30, school officials said, the district can borrow the $3 million and repay it over the next three years by raising debt millage specifically for that purpose.
In August, LCSD requested about $21.1 million from local property tax collections for operations, but supervisors rejected the request, instead providing only about $17.9 million. That forced the district’s tax rate down by almost 2 mills.
A mill is used to measure property taxes. For example, a person with a $100,000 home without a Homestead exemption pays $10 in taxes per mill.
By law, a school district can request an up to 4-percent increase in local revenue for operations each year, as well as “new property,” property that has been added to the tax rolls over the past year, without a referendum. At issue is what constitutes new property, and LCSD has sued county supervisors in chancery court to get clarity on state law.
“As you know, the board of supervisors chose not to give us new property,” Business Manager Sayonia Garvin told the school board Tuesday. “Instead, they decided to give us what they wanted (us to have).”
LCSD attempted to claim businesses with expired fee-in-lieu agreements — agreements for large industries that were allowed to pay a fee of one-third of their total taxes during their first 10 years of operation — as new property, which would have generated an additional $2.5 million in school taxes. While the district argues those industries are “added to the tax rolls” when they begin paying full taxes, the county has argued they have been assessed and on the rolls for 10 years, even if they have only paid a reduced tax rate.
Superintendent Sam Allison called the county’s argument an attempt to “circumvent the law.”
“If we don’t claim this when it comes on the tax rolls, we’ll never get it,” Allison told the LCSD board Tuesday.
The school district’s case against the county is still not decided, and Allison told The Dispatch Tuesday the shortfall loan essentially will function as insurance until it is.
“There’s no way we will lose, in my opinion,” Allison said. “… We’ll know for sure before we put (the loan money) in the bank.”
LCSD attorney Jeff Smith, a former legislator who said he helped write the laws regarding school taxes and new property, is equally confident in the district’s position in the court case.
“If we lose, the Legislature will have to step in because that wasn’t the intent of the law,” he said.
A shortfall does not mean a deficit in this case, Allison told The Dispatch after the meeting.
LCSD projects a positive fund balance for the fiscal year, which ends today, meaning it would have more general cash reserves than the roughly $11 million it finished with in FY 2020. At the end of 2019, he said the fund balance had depleted to about $5 million.
Allison credited deferred maintenance, as well as “cutting costs everywhere but in the classroom” for the stronger balance. Federal money coming for COVID-19 relief, which can only be used for certain purposes, will also help in Fiscal Year 2022, he said.
“We are in much better financial shape than we have been,” Allison said.
Zack Plair is the managing editor for The Dispatch.