Warsaw Schools Budget Up $10M Over Last Year
July 28, 2016 at 4:25 p.m.
By David [email protected]
Friday morning, Chief Financial Officer Kevin Scott explained the increase and how changes in state law will affect the school corporation.
The Warsaw School Board will have a public hearing on the 2009 budget at 7 p.m. Tuesday at the Central Instructional Materials Center Board Room.[[In-content Ad]]The 2009 estimated budget is $69,382,666. The 2008 estimated budget was $59,946,043, and the 2007 budget was $56,408,489.
WCS's budget includes eight funds. Each fund, by law, may only pay for certain items. While the general fund covers salaries, benefits and daily operations costs, the bus replacement fund only covers new school buses.
Debt service covers bonds and lease payments. Because of the elementary school building projects, the debt service fund will increase 109.3 percent from 2008 ($4,404,669) to 2009 ($9,218,506).
Scott said Warsaw Schools will start making bond payments for the elementary schools project in 2009. The lease rental payments for the bonds will come out of the debt service fund. Scott said they estimated a little bit higher than projected. The payment cap is $4,470,000. The change in debt service from 2008 to 2009 is $4,813,837.
Now the state gives a total project cap and a payment cap. Also, as of July 1, 2008, Scott said, schools are limited to a 20-year payment plan on bonds. Corporations can go less, but they can't go longer. Historically, he said, a project like Warsaw's elementary schools project could go 23 or more years.
On May 21, 2007, the school board approved moving forward with a plan that includes building new Leesburg and Madison elementary schools, and expanding and renovating Jefferson and Claypool schools. The total bond issue originally was slated for $65 million, but was approved at $59.16 million by State Tax Control Board Commissioner Cheryl Musgrave in December.
The new and renovated schools are slated to be completed in time for the 2010-2011 school year.
Another big change contributing to the budget increase for 2009 is in the Capital Projects Fund.
In 2008, the CPF was proposed at $8,877,790. For 2009, the proposed budget is $11,089,435, an increase of $2,211,645, or 24.9 percent.
Included in the 2009 CPF is $1 million for a roof replacement at Eisenhower Elementary School; $500,000 for a roof recoat at Lakeview Middle School; $296,000 in computer equipment; $245,000 in video security installation across all buildings; and $365,520 for a payment on the Warsaw Community High School Guaranteed Energy Savings program.
Add all the big chunks up, Scott said, and that's why there is an increase. The projects had already been on the horizon for Warsaw Schools, and Scott planned them into the budget.
With changes in state law, however, Scott said, they don't know how the CPF will be impacted by the Homestead Credit Deductions.
Thomas G. Mandon, executive director with Educational Services Co., Indianapolis, provides analysis and studies for schools across the state. He provided a schedule on the 2009 Homestead Assessed Valuation Deduction Calculation for Warsaw Schools. Scott went over that schedule and how it could impact WCS.
New state law, Scott said, has added new levels of Homestead deductions
If a homeowner has a house valued at $150,000, the standard deduction is the lessor of 60 percent of the gross assessed value, or $45,000. The second deduction is 35 percent of the next $600,000 of assessed value. A third deduction is 25 percent of the assessed value in excess of $645,000. The net assessed value may be reduced by a mortgage exemption of $3,000.
The 2007 WCS tax rate was $1.1805. In 2007, a home assessed at $150,000 received a Homestead Standard Deduction of $45,000. The $1.1805 tax rate was then applied to the home's net assessed valuation of $105,000, and the homeowner would pay a tax of $1,239.53.
In 2009, a $150,000 home would get the standard deduction of $45,000 and a second deduction of $36,750, leaving a net assessed valuation of $68,250. Calculated at the 2007 tax rate, the homeowner would pay $805.69.
By taking the 2007 WCS tax rate of $1.1805, subtracting the general fund rate of $0.5990 and special education preschool rate of $0.0019, then adding the elementary debt service rate of $0.1830, the adjusted tax rate for 2009 is estimated at $0.7626.
Using the adjusted rate of $0.7626, a homeowner with a home valued at $150,000, with a homestead standard deduction of $45,000 and a second deduction of $36,750, will pay only $520.47 in taxes. That's an estimated savings from the 2007 rate of $719.05.
The state will fund the General Fund. The revenue school corporations will receive from the state will depend on the number of students in the schools. That's different for CPF as it has a rate cap.
If the Net Assessed Value goes down, the tax rate for the CPF will have to go up to generate the same amount of money. If the CPF has a cap rate, and the state doesn't adjust the rate for the additional deductions, Scott said Warsaw Schools may see a significant cut in the CPF.
In the past, Scott said, the DLGF has adjusted the rate cut for such things as the inventory tax that was dropped. With all the new people at the DLGF, their position there is that there won't be an adjustment to the rate cap. That could be the roof projects at Eisenhower and Lakeview could be delayed, or WCS could buy less computer equipment.
"There could be a significant changes to come," said Scott. He said he will ask for shortfall appeals for the General Fund and Transportation Operating funds given today's uncertainties.
The proposed 2009 general fund will increase 4.1 percent over 2008 to $44,242,512. Part of that increase, Scott said, is because of a $500,000 increase in medical and dental benefits.
The transportation fund will increase 16.7 percent to $3,146,167. The $449,257 increase, Scott said, reflects how much more 2008 expenses have been greater than 2007. In 2007, actual fuel cost was just over $400,000. In 2008, fuel is projected to be about $600,000. For 2009, fuel is budgeted at $700,000.
"A large share of the increase is driven by diesel fuel for buses, which all of our buses run on," said Scott.
The retirement debt fund will decrease by $1,200 for 2009, bus replacement fund will decrease $177,000, the preschool fund will increase $14,603 and the first year of the Rainy Day Fund will be set at $400,000 for 2009.
Friday morning, Chief Financial Officer Kevin Scott explained the increase and how changes in state law will affect the school corporation.
The Warsaw School Board will have a public hearing on the 2009 budget at 7 p.m. Tuesday at the Central Instructional Materials Center Board Room.[[In-content Ad]]The 2009 estimated budget is $69,382,666. The 2008 estimated budget was $59,946,043, and the 2007 budget was $56,408,489.
WCS's budget includes eight funds. Each fund, by law, may only pay for certain items. While the general fund covers salaries, benefits and daily operations costs, the bus replacement fund only covers new school buses.
Debt service covers bonds and lease payments. Because of the elementary school building projects, the debt service fund will increase 109.3 percent from 2008 ($4,404,669) to 2009 ($9,218,506).
Scott said Warsaw Schools will start making bond payments for the elementary schools project in 2009. The lease rental payments for the bonds will come out of the debt service fund. Scott said they estimated a little bit higher than projected. The payment cap is $4,470,000. The change in debt service from 2008 to 2009 is $4,813,837.
Now the state gives a total project cap and a payment cap. Also, as of July 1, 2008, Scott said, schools are limited to a 20-year payment plan on bonds. Corporations can go less, but they can't go longer. Historically, he said, a project like Warsaw's elementary schools project could go 23 or more years.
On May 21, 2007, the school board approved moving forward with a plan that includes building new Leesburg and Madison elementary schools, and expanding and renovating Jefferson and Claypool schools. The total bond issue originally was slated for $65 million, but was approved at $59.16 million by State Tax Control Board Commissioner Cheryl Musgrave in December.
The new and renovated schools are slated to be completed in time for the 2010-2011 school year.
Another big change contributing to the budget increase for 2009 is in the Capital Projects Fund.
In 2008, the CPF was proposed at $8,877,790. For 2009, the proposed budget is $11,089,435, an increase of $2,211,645, or 24.9 percent.
Included in the 2009 CPF is $1 million for a roof replacement at Eisenhower Elementary School; $500,000 for a roof recoat at Lakeview Middle School; $296,000 in computer equipment; $245,000 in video security installation across all buildings; and $365,520 for a payment on the Warsaw Community High School Guaranteed Energy Savings program.
Add all the big chunks up, Scott said, and that's why there is an increase. The projects had already been on the horizon for Warsaw Schools, and Scott planned them into the budget.
With changes in state law, however, Scott said, they don't know how the CPF will be impacted by the Homestead Credit Deductions.
Thomas G. Mandon, executive director with Educational Services Co., Indianapolis, provides analysis and studies for schools across the state. He provided a schedule on the 2009 Homestead Assessed Valuation Deduction Calculation for Warsaw Schools. Scott went over that schedule and how it could impact WCS.
New state law, Scott said, has added new levels of Homestead deductions
If a homeowner has a house valued at $150,000, the standard deduction is the lessor of 60 percent of the gross assessed value, or $45,000. The second deduction is 35 percent of the next $600,000 of assessed value. A third deduction is 25 percent of the assessed value in excess of $645,000. The net assessed value may be reduced by a mortgage exemption of $3,000.
The 2007 WCS tax rate was $1.1805. In 2007, a home assessed at $150,000 received a Homestead Standard Deduction of $45,000. The $1.1805 tax rate was then applied to the home's net assessed valuation of $105,000, and the homeowner would pay a tax of $1,239.53.
In 2009, a $150,000 home would get the standard deduction of $45,000 and a second deduction of $36,750, leaving a net assessed valuation of $68,250. Calculated at the 2007 tax rate, the homeowner would pay $805.69.
By taking the 2007 WCS tax rate of $1.1805, subtracting the general fund rate of $0.5990 and special education preschool rate of $0.0019, then adding the elementary debt service rate of $0.1830, the adjusted tax rate for 2009 is estimated at $0.7626.
Using the adjusted rate of $0.7626, a homeowner with a home valued at $150,000, with a homestead standard deduction of $45,000 and a second deduction of $36,750, will pay only $520.47 in taxes. That's an estimated savings from the 2007 rate of $719.05.
The state will fund the General Fund. The revenue school corporations will receive from the state will depend on the number of students in the schools. That's different for CPF as it has a rate cap.
If the Net Assessed Value goes down, the tax rate for the CPF will have to go up to generate the same amount of money. If the CPF has a cap rate, and the state doesn't adjust the rate for the additional deductions, Scott said Warsaw Schools may see a significant cut in the CPF.
In the past, Scott said, the DLGF has adjusted the rate cut for such things as the inventory tax that was dropped. With all the new people at the DLGF, their position there is that there won't be an adjustment to the rate cap. That could be the roof projects at Eisenhower and Lakeview could be delayed, or WCS could buy less computer equipment.
"There could be a significant changes to come," said Scott. He said he will ask for shortfall appeals for the General Fund and Transportation Operating funds given today's uncertainties.
The proposed 2009 general fund will increase 4.1 percent over 2008 to $44,242,512. Part of that increase, Scott said, is because of a $500,000 increase in medical and dental benefits.
The transportation fund will increase 16.7 percent to $3,146,167. The $449,257 increase, Scott said, reflects how much more 2008 expenses have been greater than 2007. In 2007, actual fuel cost was just over $400,000. In 2008, fuel is projected to be about $600,000. For 2009, fuel is budgeted at $700,000.
"A large share of the increase is driven by diesel fuel for buses, which all of our buses run on," said Scott.
The retirement debt fund will decrease by $1,200 for 2009, bus replacement fund will decrease $177,000, the preschool fund will increase $14,603 and the first year of the Rainy Day Fund will be set at $400,000 for 2009.
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