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Facing an additional $3.5 million in expenses over the next two fiscal years, Oldham County Schools Superintendent Will Wells signaled his intention to ask the Oldham County Board of Education for another property tax increase this year.
The expenses come from state mandated requirements to increase the contribution amounts to the Kentucky Teacher’s Retirement System from 1.5 to 3 percent by fiscal year 2016, as well as a 3 percent cumulative pay raise by the same time and require step increases, which are given based on how many years a teacher has been in a school district, Randy Davis, OCS’ assistant chief financial officer, said.
Those expenses don’t even account for needed technology upgrades or new buses that will be needed in 2016, he told board members.
“The tax increase would go straight to teachers and classrooms,” Wells told board members. “And I think it’s high time for another one percent salary increase for our teachers.”
And while the state is also increasing funding to school districts through the SEEK formula, a portion of those funds have specific uses and the sums won’t offset for the additional compensation expenses, Davis said.
The district will face an additional $1 million in expenses in fiscal year 2015 and $2.4 million in fiscal year 2016, Davis said. Those figures, Wells said, will cause him to ask for a property tax increase for the second year in a row. The board approved a 4 percent rate hike, to 73.4 cents per $100, last August.
“If you look at the fiscal year ’16 expenses being $2.4 million more than what we are spending in fiscal year 2015, you can see we’re already short,” Wells said. “So instead of postponing to the 2016 budget, I will be requesting an increase more than the compensating rate.”
The school district has two main benchmarks when it comes to raising taxes, Davis told the board. The first is the compensating rate, which if selected would raise the taxes slightly to 73.6 cents per $100. The other benchmark is a 4 percent raise, Davis said, which would move the tax rate to 76.5 cents. The district can also request a rate between those two benchmarks, which Wells left open as a possibility.
“It may not be four percent,” Wells said. “We’ll look at that. But we need to look at two years (out) for our property owners.”
Davis said if the board selected the compensating rate for 2015, it would raise an additional $870,000 in revenue, not enough to meet the more than $1 million in new expenses for that year. An increase to the full four percent would raise $2.4 million, Davis said, which would cover the full new expenses by 2016. If the tax rate stays unchanged, the board will receive $784,000 in new revenue, thanks to new development in the community, Davis said. The values from existing properties actually declined again this year, hurting the school district’s revenues, Davis said.
Additionally, Wells said he will also be bringing a request for a 1 percent pay raise for teachers, in addition to the state-mandated pay raises, to keep the district competitive. That additional pay raise will require even more money in expenses, Wells said.
“We are being outpaced by our neighboring counties in compensation,” Wells said.
That pay increase will be offset somewhat by an $800,000 surplus in the fiscal year 2014 budget, Wells said.
Wells said the district is still waiting on final information from the state before presenting the board with the request to raise the property tax rates. Board members were largely quiet on the issue at the meeting, besides asking for additional information when Wells settles on an exact rate.
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