Kenneth Hughes, business manager for Lowndes County School District, sat at his desk Friday afternoon tapping away at his keyboard and occasionally scrawling numbers on a sheet of paper sitting beside his computer monitor.

All the while, Superintendent Lynn Wright paced around the room, spouting about dollar amounts and projects without the use of any documents to support the information.

“We had some projects that weren’t budgeted,” Wright said. “We had a sewage project (which) ended up being $1.2 million. (We also had) the purchase of the property for the career tech center and then the different things for the remodeling of West Lowndes and Caledonia Middle School, (and) the field house (at New Hope). Each time, you take it out of fund balance (because) these were not budgeted items. I’m just talking off the top of my head so some of these figures might not be specific, but we spent, I believe it was, … $200,000 on band equipment. We built some roads and did some paving that wasn’t in the budget, but we had it in the fund balance. … We did the one-to-one initiative (equipping each student with a computer or tablet), which was $3 million, plus $1 million a year thereafter on the lease.

“We have had some major expenditures, but it has paid dividends for us in the growth of our students,” he continued.

Finally, Hughes revealed the product of his scrawling — a comparison of the school district’s revenue against expenditures since 2013. According to his records, LCSD had a near $6 million budget shortfall in 2014 and has operated at deficits for each of the last three years that exceed a combined $7 million.

Part of that total includes the $2.5 million deficit expected this school year, which ends June 30. At that point, LCSD’s once gaudy $17 million fund balance (operation fund reserve) will have dwindled to a little more than $4 million.

“We just spent more than we took in,” Hughes said. “… This is the very last year we can do it.”

The state recommends districts carry a fund balance that is at least 7.5 percent of its total revenue. LCSD budgets operating revenue at about $60 million per year (which is the total that comes from local, state and federal sources), meaning the fund balance of $4 million would sit right at that threshold. Another year of relying on the fund balance to cover shortfalls will plunge LCSD well below state expectations.

School board policy, on the other hand, sets a goal to have 15 percent in fund balance.

“I know it doesn’t look good on paper, but we’re proud of the way we’ve utilized our resources and the way our administrators have managed their budgets,” Wright said.

Budget cuts

Earlier this school year, cracks began to show in the district’s financial health when board members approved borrowing $2.5 million in November to make payroll, a loan paid back with property tax collections LCSD received in February.

By late March, Wright was crafting a plan to save about $4.5 million in 2019-20, the bulk of which would come from slashing about 60 teaching positions district wide. The school board is expected to vote Friday to non-renew all contracts for first-year teachers, then the district will try to rehire as many of those as possible to fill spots left vacant by other resignations and retirements.

For Wright, who has served as superintendent since 2012, all of this bad budget news comes at a critical time. His last four-year term as an elected official ends Dec. 31, when state law deems his position will become board-appointed.

The board will soon begin taking applications for superintendent, and Wright’s is expected to be among them. But it’s unclear how much impact the deficits will have on Wright’s chances of being rehired.

“I don’t think it will have any,” said board president Robert Barksdale, though he did not elaborate.

An aversion to raising taxes

LCSD hasn’t raised its millage rate for property taxes since 1989.

Now, the rate sits at 46.71, even as consecutive years of deficits run in tandem with the district trying to pay off a $44 million construction bond — at a rate of about $3 million per year for the 17-year note.

The bonds, issued after voters approved a ballot measure in May 2015, built New Hope High School, a Career Tech Center on Lehmberg Road and paid for other capital improvements throughout the district.

LCSD used its fund balance and lease-purchase agreements for a new $23 million Caledonia Elementary School, renovations at West Lowndes and a $2 million field house at New Hope.

They did all of this, while district officials promised not to raise property taxes, instead depending on projected new tax revenue from businesses that would soon begin paying full taxes once their fee-in-lieu agreements — which allow companies investing more than $100 million to locate to Lowndes County to pay only one-third of their property tax bill for up to 10 years — expired.

Some of the expected funds never came. Steel Dynamics Inc., for example, moved inventory to its tax-exempt paint shop, which led to the district receiving less tax revenue than expected.

The school district has sought an attorney general’s opinion on the SDI issue.

The latest fly in the ointment — one that cost the district about $800,000 this year — was a state Supreme Court decision that exempted all businesses located on airport property from paying any property taxes. The Legislature changed the law this year, which means Airbus, Aurora Flight Sciences and Stark Aerospace — all located on Golden Triangle Regional Airport property — will pay those taxes again next year.

But much of the expected money did come.

In 2016-17, LCSD collected $14.8 million from property taxes, Tax Assessor’s Office records indicate, and operated at a $3.6 million deficit according to Hughes. The next year, mainly due to increased SDI taxes that were paid, the district collected $19.6 million in property taxes, but operated at a $2.1 million deficit.

Collections dropped to $18.7 million this year, with the expected $2.5 million operations deficit poised to come to fruition.

Some board members, like Brian Clark, are considering a tax increase as an option for next school year.

“Taxpayers could likely see an increase,” Clark said. “But we have to look at the numbers come budget time.”

Wright, however, is not resigned to a tax increase just yet.

Tax Assessor Greg Andrews estimates collections to climb back to about $20 million next year, and several fee-in-lieu agreements will convert to full taxes a year later, meaning LCSD is expected to collect $23.3 million from property taxes in 2020-21.

Those revenue estimates, combined with the district’s spending cuts, should stop the bleeding, Wright said.

“We may not even have to raise taxes,” he said.

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