School District Presents Preliminary Budget

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On Monday, March 20, Milford School District Board of Education presented a preliminary budget for the 2017-18 school year. Superintendent Dr. Kevin Dickerson said that the budget presented was a draft version and that public hearings would be held in April or May that would allow citizens of Milford to express any concerns. He also said the preliminary budget was contingent on the State of Delaware budget which Governor John Carney planned to release on Thursday, March 23.

“We have heard many rumors about what Governor Carney’s budget will look like,” Dr. Dickerson said. “Governor Jack Markell issued a budget prior to leaving office that included many cuts to education. One of the proposals in Governor Markell’s budget was requiring districts to pay 30 percent of all transportation costs. If that remains in Governor Carney’s budget, Milford could see transportation costs rise from just under $300,000 per year to over $600,000 per year, and this does not include transportation for homeless students. That being said, we have created a budget that we think will work even if some of these cuts become reality. Only a few minor adjustments will have to be made.”

Sara Croce, Chief Financial Officer, explained that the state was facing a $350 million deficit for the coming year and that the governor had indicated that all agencies in the state should expect cuts. However, he indicated that the state may allow an additional match tax to cover the additional costs of transportation that would need to be absorbed by the district. A match tax is a tax the district can implement without referendum that must be used for specific expenditures. The district currently has a match tax for Minor Capital Improvements, something the state requires in order for the state to cover 60 percent of the costs of any improvements that fall under that program. It is possible that the district may need to implement a match tax to cover the added cost of transportation. The district must also create a budget that allows for rising costs for tuition-funded services and a need to provide high-quality education for all students.

Ms. Croce explained that school taxes are broken down into four sections. Taxes used for current expenses, including textbooks, supplies and the district share of teacher salaries, was changed by referendum in 2015. This portion of property taxes cannot be changed without a referendum and will remain unchanged for 2018. Debt Service is used to pay bond payments that were created as a result of referendum. Ms. Croce recommended that the board adopt an aggressive method for the debt service portion of property taxes using impact fees the district has collected from Kent County.

“We have been saving the impact fees we receive over the years, an amount that averages $50,000 per year,” Ms. Croce explained. “We can only use these fees for debt service. By using these fees, we could lower the debt service portion to our tax payers.” Ms. Croce showed a slide that indicated savings to tax payers of between $11 and $43 for taxpayers using the method. She explained that using the aggressive method would not pay the district’s debt faster, but would simply lower tax rates and help property owners in the district. Board Member Hunter Emory asked if a downturn in real estate could result in a problem for the district down the road if they used the funds and Ms. Croce said that the last real estate downturn did not greatly affect the amount the district collected in impact fees. The district only gets impact fees from Kent County. Fees are not collected from Sussex County.

Under the Match Tax, the district has no plans to implement taxes for extra time services, technology or reading and math specialists. If the state requires districts to pay 30 percent of transportation costs and allows for an additional match tax for transportation, Milford may need to implement a tax to offset those additional costs. Under the current budget proposal, match tax could be reduced slightly which would change if the district implemented a match tax for transportation.

The final portion of property tax was the Tuition Tax. In 2016-17, the board voted to increase this portion of property taxes significantly. This led to displeasure among many property owners who said they felt the district was not transparent enough when they passed the increase. Ms. Croce explained that special education services continued to rise in cost. In addition, prior to 2016, the district did not have contingency funds in place to cover costs should they increase significantly in one year.

“In an effort to lower these costs, we have added more special education services within the district,” Ms. Croce said. “This combined with other cost saving measures has allowed us to start building a contingency fund. We believe that we can lower the tuition tax rate between 17 and 23 percent for next year. This could mean a savings for property owners between $37 and $179 in their property taxes.” Overall, Ms. Croce explained that the district was planning to lower the school tax portion of property tax in all categories with the exception of the match tax portion depending on the state budget. Dr. Dickerson said that, although there could be surprises in Governor Carney’s budget, staff was “comfortable with the predictions.”

Board Member Barry Fry asked about homeless transportation, requesting information about what qualified a student as homeless. Ms. Croce explained that any child who began the school year in Milford who was displaced during the school year, such as placement in foster care, moving in with other relatives or living in a shelter, was considered homeless.

“Do you mean that if something terrible happened and my grandchildren, who live in Middletown, had to move in with my wife and I, they would be considered homeless?” Mr. Fry asked. “Even though we are family, are providing them with a good home, Middletown would be required to bus them back and forth?” Ms. Croce said that was true, that the definition of homeless under the McKinney-Vinto Act had been expanded significantly over the years. She also explained that there were very few homeless shelters in Milford which meant students were placed in shelters in Dover or Georgetown. Those children must be provided transportation to and from Milford until the end of the school year.

Ms. Croce explained that the preliminary budget would be presented in draft form to the board at the April board meeting. Public meetings would be scheduled in April or May at Lulu M. Ross Elementary School and Milford High School. The final version would be presented to the board again in May but a vote would not take place until June. Once the board approved the final version, the tax rates would be sent to the counties for implementation.

The slideshow presented by Ms. Croce regarding the various tax rates is available on the district website under the Board tab. Those interested in seeing the presentation should click on Board Meetings and then the Board Documents tab for March 20, 2017. The slideshow is at the end of the documents.

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