Wichita school district residents likely will pay less in property taxes this year, but it’s unclear exactly how much less.
Jim Freeman, chief financial officer for the Wichita district, says savings could range from $4.6 million to more than $14 million, depending on whether the school board decides to increase its capital outlay mill levy.
“I can’t really give you a direction we may go because we’re still trying to analyze it,” Freeman said. “There’s still an awful lot of unknowns.”
A new school finance bill is expected to send millions of dollars to Kansas school districts – most in the form of property tax relief. Some of that savings, however, will be offset by changes to the school funding formula and other factors.
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Wichita, for example, stands to lose more than $1 million from cuts to funding for at-risk, nonproficient and virtual students. It also will lose additional funds it received the past two years for students attending new school buildings.
Five new schools, including Wichita’s first new high school in more than 30 years, opened in the fall of 2012. That briefly increased the district’s so-called weighted enrollment and pumped millions into the budget, but only for two years.
“We have almost $5 million in new facilities weighting money that’s going away,” Freeman said. “We knew this was going to happen, but it makes a big difference to us.”
Freeman and his staff are developing next year’s budget. School board members are expected to get their first official look at it – along with Freeman’s recommendations – in July.
During preliminary presentations, Freeman said the district’s bond and interest mill levy will go up just over 1 mill – from 7.753 to 8.898 – to pay for increased payments related to the recent sale of $50 million in bonds for school construction projects.
Board members have said they don’t plan to raise the district’s local option budget authority this year, which would require a public vote.
That leaves the capital outlay mill levy.
“Thankfully, we have a little flexibility there,” Freeman said, in terms of both setting the levy and the types of expenses that can be funded through capital outlay.
Capital outlay flexibility
The board recently voted to increase its capital outlay property tax authority to 8 mills to take advantage of looser restrictions on the fund. In coming months, Freeman said, board members will have to decide whether to raise the mill levy from the current 4.25 mills, and if so, how much.
Leaving the mill levy at its current rate would result in a 5.5-mill reduction on local tax bills – a savings of about $63 for the owner of a $100,000 house. Wichita schools still would get nearly $4 million in additional funding for capital outlay projects.
Raising Wichita’s capital outlay mill levy to the maximum 8 mills would result in a mill levy reduction of 1.75 mills – about $20 savings for the owner of a $100,000 house – and would generate an additional $17.1 million for Wichita schools, Freeman said.
If the district sets its capital outlay mill levy at 6 mills, it would result in a mill levy reduction of 3.75 mills – about $43 savings on that $100,000 house – and would generate about $10 million in additional funding.
Beginning this year, districts also will have greater flexibility in how they spend capital outlay money. The rule used to be “bricks and mortar, construction projects, furnishings, computer hardware, those things,” Freeman said.
New guidelines will allow districts to pay for computer software, facility maintenance and even “performance uniforms,” such as band or athletic uniforms, out of capital outlay, he said.
“What we’ll gain is, we may be able to move $10 million of expenses out of the general fund over to capital outlay because we can spend the money there now that we couldn’t before,” Freeman said.
In a report to the Wichita school board Monday, Freeman said he will highlight “big-picture” options for projects and expenditures the district potentially could finance with additional capital outlay dollars.
Some Wichita-area suburban districts, including Maize and Goddard, have their capital outlay mill levies set at the maximum 8 mills. Derby’s is set at 6 mills. Wichita’s has ranged from about 4 to about 6 mills over the past decade, Freeman said.
Don Adkisson, director of finance for Derby schools, said that district expects to receive about $1.2 million in tax relief because of the increase in state aid to the local option budget. The district’s mill levy is expected to go down about 3 mills, he said.
Officials in Maize and Goddard said they are still developing their budgets and don’t yet know how numbers will shake out, especially because local assessments vary. Andover officials said they expect their property tax rate to be essentially the same next year.
“There are a lot of moving targets, and we’re waiting to see how they all play out,” said Lori O’Toole Buselt, spokeswoman for the Maize district. “I know our Board of Education has always tried not to add more tax burden.”
Asked about potential tax relief for residents in the Goddard district, spokeswoman Annette Singletary said, “At this point in time, we still don’t know the answer to that question.
“We’re in a growing district where our assessed value is changing all the time,” Singletary said. “Until they have budget documents ready, we’re not going to know how it will affect our property taxes.”
Districts will start to see proposed budgets from their finance officials next month. The deadline to approve budgets is Aug. 25.
As Freeman and other district finance directors compile their budgets, they’re also monitoring troubling reports about shortfalls in state revenue.
Kansas tax collections in April and May fell $310 million short of expectations. Projections earlier this month from the Kansas Legislative Research Department research staff showed a budget shortfall developing by July 2016, with collective shortfalls of nearly $1.26 billion through July 2019.
“If the June revenues decline more, that ending number could get really scary,” Freeman said. “We’re in a situation with the state right now that mirrors the 2009-10 fiscal year, in terms of what might be happening to us.”
That year, reductions in state revenue because of the recession prompted mid-year school funding cuts and subsequent reductions in state funding.
Wichita, the state’s largest school district, eliminated 117 positions, cut the driver’s education program at high schools, closed an alternative high school and did away with school resource officers in middle schools, among other cuts and program changes.
“I have to keep in the back of my mind that this is a potential,” Freeman told a group negotiating the district’s teacher contract last week. “And quite frankly, I’m scared because I think it’s going to happen.”
Freeman said he would not propose building cuts into next year’s budget because expenses in several areas, such as utilities and transportation, are expected to grow.
“We just can’t afford to do that. We’re so slim right now in terms of what we do,” he said.
“As I build (the budget), I’m going to have to be much more conservative,” he said. “Because if we get to the middle of the year and I have to make $5 million in cuts, I have to think about that in terms of what we’re going to do.”