Lowndes County School District has declared a shortfall in local tax revenue for its fiscal year for the third year in a row.
In a special-call meeting Thursday, the board declared a more than $1.1 million shortfall in its operating budget for Fiscal Year 2023, which ends Friday.
The district declared a shortfall of more than $2.1 million in FY 2022 and one of more than $3 million for FY 2021.
A shortfall is the difference between the amount of money the school district requested in ad valorem taxes from the Lowndes County supervisors at the beginning of the fiscal year and what supervisors actually approved for the district to receive. It does not mean there is a deficit in the district’s general funds.
LCSD’s fund balance for the end of FY 2022 was roughly $19.9 million, and Business Administrator Sayonia Garvin said she still needs to calculate payroll and transfers for things such as vocational and special education programs before knowing FY 2023’s final fund balance.
Superintendent Sam Allison said the district needs the funds for general operating expenses as those have increased in recent years.
“This isn’t necessarily designated for projects as much as it is for the day-to-day runnings,” Allison said. “… We’re still working to do things that need to be done from all aspects of operating the district.”
Each year, county supervisors approve LCSD’s ad valorem tax allotment, collected from property owners based on their property’s assessed value. The district asks for a certain amount of money, and the county sets the number of mills, or the tax rate, necessary to collect it.
In declaring a shortfall prior to June 30, LCSD can borrow funds to make up for the shortfall and request special tax millage to repay the debt over three years. While supervisors did not approve the full amount of the district’s last three tax requests, they have levied the special millage the last two years to cover LCSD’s declared shortfalls.
Garvin said the interest rate for the FY 2021 shortfall note is 1.19%, and the rate for the FY 2022 note is 4.21%. She is expecting an even higher interest rate for this year’s shortfall debt.
By law, the district can request an increase of up to 4% in ad valorem each year for operations. An increase of more than 4% and up to 7% triggers a potential reverse referendum, meaning citizens can sign a petition to get the tax hike on the ballot. More than 7% requires a direct referendum.
The law exempts “new property” — property on the tax rolls for the first time — from that equation.
In each of the last three years, county supervisors have denied the school district’s full request, claiming it exceeded the amount it could legally obtain. LCSD sued the county in chancery court in 2020, claiming expired fee-in-lieu agreements — which added $50 million to the assessed value of property within LCSD boundaries — could be counted as new property since they had not previously been on the tax rolls.
The county can grant a fee-in-lieu to a business investing at least $60 million. The agreement allows the business to pay one-third of full taxes for up to 10 years.
Chancery Judge Rodney Faver ruled in LCSD’s favor in August 2021, and the county appealed to the Mississippi Supreme Court.
Earlier this month, the supreme court threw out the case because the district filed suit in the wrong court. The ruling said LCSD should have filed in circuit court within 10 days of the supervisors’ vote.
The supreme court did not address the “fee-in-lieu” issue, and LCSD attorney Jeff Smith said the district has asked it to rehear the case.
In the meantime, declaring a shortfall shows supervisors LCSD needs the money and also keeps the district eligible to request 4% increases each year from a higher base amount, Allison said.
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