Members of the Red Clay Board of Education got a detailed briefing on the district’s current budget last week, but they will wait until next month for a vote on the proposal.
The budget is close to the preliminary budget for this fiscal year, according to District Chief Operations Officer Ted Ammann. The district’s predictions about state funding, property tax revenue, and other unknown factors last summer generally came to pass.
The biggest financial hit the district will take this year comes from delayed property tax bill due dates in New Castle County. County officials extended the payment deadline to December 31 as they wrestled with a shifting tax landscape, public outcry about reassessment, and litigation. That delay cost the district about $1 million in interest it would normally receive on property tax payments in its accounts.
“In a typical year, most of our funds come by the end of October and November, and we keep them in the bank, so to speak, until the end of the year as we work our way through our budget,” he said.
Despite that, Ammann says the district is on track when it comes to receiving property tax money under the revised deadline.
Still, complications and uncertainty persist alongside the fallout from reassessment. One wrinkle is the huge number of appeals sparked by the first property reassessment in four decades. Amman says the county has received over 5,300 appeals. About a third of those have been resolved, mostly in the property owner’s favor.
“The vast majority of those 1,780 appeals went exactly the way the homeowner or the business owner had predicted,” Ammann told board of education members. “They felt that the reassessment was too high. They submitted the form to the county, the county reviewed it, and they have stipulated, meaning they didn't need to have a hearing. They looked at it, and everyone agreed and signed off on the new value.”
The district was able to predict that in this year’s budget, he said, but next year will be trickier.
Another complication is the district’s controversial split tax rate. Passed by state lawmakers last year, and upheld after litigation, the split rate allows the district to charge business property owners a different rate than they charge residential property owners. The result is residential property tax bills that are about 12% lower than they would have been without the split rate.
But, that provision expires on June 30 unless state legislators renew it.
Overall, this year’s preliminary budget is a lean one. Ammann told board members that the deficit spending of past years is no longer a concern, thanks in part to a referendum two years ago that saw support from some 70% of voters. Now, he says, the district is on a firmer financial footing.
“Our current year revenue over expenses is $707,000, and that means that we are spending less money than we're bringing in. Before the referendum, you heard me talk about deficit spending for a number of years and the fact that we were spending down that balance of funds and we were deficit spending,” Ammann explained. “We've turned that corner as a result of the referendum and those receipts that are coming in.”
This budget grows the local balance by just over 10% to $7.5 million. Overall, spending is up by 2.3%, but Ammann said most of that increase is covered by increased state funding.
“2.3% is higher than I would like to see, but most of that is that state money that is completely passed through when it comes in to us and then goes right back out,” he explained. “We have held our line to less than half a percent in terms of expenses on the local side.”
With the current year’s budget under control, Ammann warned about more uncertainty in next year’s. One thing to watch, he said, is funding for the Wilmington Learning Collective, which funds 12 teachers and five paraprofessionals in the district. The collective is up for an $8 million funding cut in Governor Matt Meyer’s recommended budget.
Part of that cut would be an end to a grant program that supports athletic trainers. That program pays for one of the district’s trainers. Ammann characterizes the change not as a savings, but a shifting of the financial burden to the district.
“It's really not a total savings. It's a savings to the state budget, and then we'll have to figure out how to work that out in our local budget.”
Other cuts would eliminate state funding for building-based substitute teachers - seven in Red Clay - and for substitute teachers in general when full-time teachers take their 12 weeks of parental leave. Ammann estimates that would cost the district about $85,000.
Meyer’s budget is still under consideration by the state’s Joint Finance Committee. Representatives from the state Department of Education are slated to testify before that committee on March 3.
Also looming in the future is the upcoming negotiations with the district’s teachers union.
Board members seemed generally supportive of the budget and could have voted on it at last week’s meeting. Board member Beth Twardus moved to do just that, but quickly amended her motion to postpone a vote until next month, saying she needed more time to look at the budget if possible.
“I work in a school and I did not have the ability to look at the full draft of the report when it was posted today until this afternoon,” she said. “So I know I personally need a little bit more time to look at the full draft.”
That motion passed unanimously, and the Board of Education is set to vote on the final budget on March 18.
