Wednesday, March 30, 2011

Levy funds could help pay teachers

Idaho law allows conversion of revenues to meet operating costs

Express Staff Writer

Lonnie Barber Mike Chatterton

As education dollars become more scarce, Idaho law provides a way for school districts in the state to convert property tax revenues collected for new facilities or building improvements into funding for teacher salaries.

An Idaho statute enacted into law in 2010 is being tweaked in the final days of the 2011 Legislature, but according to the Idaho Department of Education, the end result will be a permanent mechanism to help school districts cope with shrinking operating expense budgets.

The law is applicable to the Blaine County School District, which in 2009 received voter approval to collect $5.9 million per year in property tax assessments for 10 years to fund new facilities and building improvements. The first year of funding was for fiscal 2010, but district officials concede that $23 million of the $59.8 million to be raised by the 10-year plant facilities levy has already been spent or committed.

The practice of borrowing on future levy revenues was approved in 2010 in Blaine County 5th District Court. Since then, the district has embarked on an ambitious spending program for new facilities, geothermal resource development, technology acquisition and security upgrades.

Business Manager Mike Chatterton said using facility funds for operating expenses is not an option that the district needs to consider now, but he noted that it might be an option the district could use several years down the road.

Idaho statute 33-804 identifies the mechanism a school district can use to convert facility funds into salary payments or other operating expenses. According to the law, the process requires that the Legislature declare a "financial emergency," that the district board of trustees decides to submit the question to the voters and that the electorate approves the measure.

Approval could only be for two years, and the funds could be converted only in the years that they were actually collected. The law does not provide for borrowing on future levy revenues.

Melissa McGrath, spokeswoman for the Idaho Department of Education, said the provision of the law that requires a declaration of emergency has been removed this year by the Legislature and that new language will be inserted into the statute to make it a permanent fixture without the need for an emergency declaration.

Chatterton said using the conversion funding option will not be financially necessary to the School District in the near term because it has created a reserve fund that currently stands at $13.1 million.

While the state funding cut for this year has not been determined, Chatterton estimates it at $1.7 million for the Blaine County School District. That follows state funding cuts during the past two years that have totaled about $3 million.

District reserve money, which Chatterton refers to as a "rainy day fund," has helped the district absorb state funding cuts the past few years without loss of staff or programs. However, Chatterton said likely funding cuts in the future and increased operating expenses will eventually whittle the reserve away.

"The reserve fund will be gone by sometime around 2013 or 2014," he said. "Obviously, we're going to try to extend it out as far as we can."

He said that as long as the district maintains its reserve fund, converting facility dollars to operating expenses doesn't make sense.

Establishing the reserve fund was possible because of a permanent "stabilization" levy that the district is allowed to collect through property taxes. The levy provides the district about $30 million annually for operating expenses.

However, the Legislature is considering removing the permanent status provision of the stabilization levy and requiring that the district get voter approval every two years to collect the funds.

District Superintendent Lonnie Barber said that if the district loses the stabilization levy, converting facility funds to operating funds would be of only marginal benefit to the district.

"It certainly wouldn't save us," Barber said. "But it would help. That would be about a sixth of what we would need each year."

Terry Smith:

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