Skip to content Skip to left sidebar Skip to right sidebar Skip to footer

County maxed out on support of education

A drop in student enrollment, combined with a slight increase in the county’s fiscal capacity and a disproportionate split of sales tax revenue have Washington County maxed out on its support of education.
Maryanne Durski and Stephen Smith, both from the state Department of Education, attended a joint meeting of the board of education and county commission Feb. 23 to explain the Basic Education Program funding formula, which determines how this year’s $3.7 billion is directed to school districts throughout the state.
Members of the Johnson City School Board and State Reps. Matthew Hill and Dale Ford were also in attendance.
“The BEP is designed to provide an equitable education for students all over the state, regardless of the wealth of the county,” Smith said.
Property and sales tax capacity, per capita income, tax burden and school population are used to evaluate each county’s ability to pay.
“If the student enrollment drops, you will typically see a decrease in funding,” Durski said. “If the (student enrollment numbers) continue to decline, you will see a gradual stepdown in funding.”
A drop in student population, the county’s slightly higher fiscal capacity and the formula comparison with counties statewide led to Washington County being placed on stability status this year.
When Director of Schools Ron Dykes argued that enrollment in the system is up, Durski said reporting the average daily enrollment correctly is critical.
“The numbers we have now seem to be level enrollment,” she said, adding the BEP funding this year is based on 109 fewer students.
Though the BEP funding was reduced, the state did consider the county’s stability status and provided 60 percent of the funds needed for the required 1.6 percent employee pay increase.
Washington County provided the remainder of the funds and increased the raise to 3 percent.
Smith said while the maintenance of effort provision does not require the local government to make up the difference if the BEP funding is decreased due to a lower student population, Washington County is meeting its required funding of the system.
“You would have heard if you were not at your maintenance of effort level,” Smith said.
A county’s fiscal capacity is a statistical estimate of its relative ability to raise revenues through local sources, such as the property tax or the local options sales tax. The fiscal capacity is the primary equalization instrument in the BEP.
However, Mayor Dan Eldridge said the gains in fiscal capacity are not providing enough revenue to offset the loss in the BEP allocation.
One of the problems is 88 percent of the sales tax revenue is collected by the city. “This has a dramatic impact in the disposition amounts available to the school systems,” Eldridge said.
Johnson City receives 68 percent of sales tax revenue available for education, compared to Washington County’s 29 percent.
“In Washington County, 100 percent of the sales tax revenue is allocated to the schools, which is not the case in Johnson City,” Eldridge said. While the city has the capacity to increase its support of education, the county has reached its limit.
Washington County ranks 13th in the state in local funding, but remains $986 below the state average in per pupil funding.
Eldridge said more than $16 million in new recurring income would be needed annually to make up that $986. “We’re fighting a battle we can’t win,” he said during the meeting.
According to Eldridge, Johnson City receives 234 percent more from sales tax than Washington County. Approval of the proposed sales tax increase would provide additional revenue, but the division would remain the same.
“The impact would probably not come close to filling the hole,” he said, adding that Washington County is in the sixth year of the funding gap and the loss has been accumulating.
A change to the formula model went into effect in 2007, followed by a reappraisal during 2009 that increased the assessed property value by over a quarter of a billion dollars.
“No new revenue was included in the reassessment, which created a hole in the funding,” Eldridge said. “We should have been preparing and dealing proactively with the issue.”
Johnson City’s ongoing annexation of county property is only going to complicate matters. “What they are doing is diminishing the county’s ability to fund the school system,” Eldridge said. “Because of our inability to grow the sales tax base, our only option is to raise property taxes.”
Despite its limited resources, Eldridge said Washington County should not expect the taxpayers to bear the burden of the disproportionate share of sales tax revenue.
Eldridge plans to meet with State Comptroller Justin Wilson to make him aware of the challenge the county is facing. “He’s the best resource we have to deal with this issue,” he said.