The Gilbert Unified School District would have to to cut another $5 million from its budget if an idea to maintain the current primary property tax rate takes hold.
The Gilbert school board heard another budget update Tuesday as the district works to cut $6 million from next year’s budget because voters turned down a request last fall to renew a maintenance and operations budget override.
But if the district does not raise its primary property tax rate - as it is allowed by the state - it could mean a loss of another $5.5 million. And that's one idea board member Daryl Colvin is pursuing.
Tuesday’s presentation by director of finance Teddy Dumlao included a look at how schools in Arizona are financed and how the funding formula by the state connects to primary and secondary tax rates and property values.
Each year, the district’s primary property tax rate – also known as the qualified tax rate – adjusts based on property value increases and decreases to maintain a steady stream of funding to schools, Dumlao said. The base funding for school districts is determined by enrollment and the amount allocated by state lawmakers, which is then used to calculate that primary tax rate.
So for the upcoming fiscal year – which begins July 1 – the district's primary tax rate is projected to go up a bit, from 4.0887 to 4.3518. With that change, Dumlao told the board, the district would receive all the funding it is allocated by the state.
“What’s being proposed would be a property tax rate increase, however we do anticipate the dollar amount paid will be comparable, if not slightly lower,” he said.
The primary tax bill for a median homeowner in Gilbert would go from $361.35 this year to about $360.75 next year, he said.
But Colvin said he wants to look at maintaining the current property tax rate. That would mean a $36 decrease in the primary property tax bill for a median home owner, Dumlao said.
That would also mean the district would receive about $5.5 million less than it’s scheduled to get based on current budget projections. Dumlao added that would mean making more cuts on top of the $6 million deficit scheduled for next year from the override loss. The district has already cut $26 million in the last three years because of revenue decreases by the state.
None of the surrounding school districts take below their state allocation, said Clyde Dangerfield, assistant superintendent of business services for the Gilbert district. But he did say he has heard of districts in the state doing it in the past.
“If Gilbert were to not adopt to the budget limit and the other districts were to, Gilbert would have less per pupil funding than surrounding districts on the primary side,” Dumlao told the board.
The board was presented several budget options that address the current projected deficit, including suggested cuts and budget savings.
Colvin said he believes the district really needs to consider “option C,” or the idea that the district not raise the primary property tax rate. The district has not presented ideas on how to cut another $5 million.
“Some of the budget challenges we have with this year will not go away. We have concerns one, two years down the road. Looking far ahead, I feel inclined to insist you look at ‘options C.’ It doesn’t look like a lot of work has been done on that yet,” he told Superintendent Dave Allison. “That issue may not matter just this year. That kind of controlled expenses may matter this year and the year after that. I really would like to have in front of me a full workup of what ‘option C’ looks like if we go that way.”
That idea did not sit well with board members Lily Tram and Jill Humpherys.
“I believe the question we should be asking as a board and district is, ‘What is the quality of education we want our students to have?’ When we look at that, we will want to align our resources in the best way possible for our students to get the best education they can," Humpherys said.
Board member Julie Smith pointed to her research about education funding.
“There is no established correlation between money spent and quality of education. There are plenty of schools out there that educate their students for very well for far less than we do,” Smith said. “We are an A district and we got it spending less.”
The district’s budget projections so far are based only on Gov. Jan Brewer’s proposed budget for the state, which provides about $2.4 million more to Gilbert next year. Board president Staci Burk said she is concerned that when the Legislature presents its budget idea and the two are meshed for the final fiscal year budget, that the district may not receive as much funding as it is anticipates no and may need to make additional cuts.
“As a budget committee we’re going to work in that area to make sure we have a contingency plan to manage that money,” superintendent Allison said. “We don’t know what’s going to happen. … Hopefully at the next meeting I’ll show you the contingency.”
The school district's secondary tax rate - set by voter-approved overrides and bond projects - will already drop because voters turned down the budget override renewal and because one of the district's capital override expired. The district did not seek a renewal on the capital override.
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