2015-16 Budget and Tax Rates – My View

Approving budgets and tax rates is one of the most important functions of our school board.  On Monday June 15, the Board will approve the 2015-16 budget and the tax rates that go with it.

Although the expense budget is set, there has been a lively debate about the millage rates needed to fund that budget.  At our June 8 school board working session,  several community members expressed their opinions about tax rates, and many board members also offered their views.

Below are the remarks I offered at the work session:

On the Budget, I think it is critical that we manage our finances for the long-term, and that we maintain our historically conservative approach to financial matters.  We have a strong credit rating, which reflects our history of careful decision making, efficient operations, and respect for our taxpayers.    The expense side of our 2015-2016 budget is set, and I think we have a responsible expense budget.  Our programs are fully funded.  There are no cuts to programs, no changes to class sizes, no investments needed that have been turned down.

Where we do have a decision to make is in how we raise the revenue to cover those expenses.

In evaluating alternatives, there are two principles that drive my thinking.   First, I feel a great responsibility to preserve the financial strength and health of the district over the long-term.  We should hold fast to our budget practices that have proven successful in the past, and that have proven to be fiscally responsible.   I moved to the district for our schools, I have three kids in our schools, and my youngest will graduate from UHS in 2026.  Our community needs our schools to be in strong for the long term and I am fully committed to that objective.

Second, I feel an equally great responsibility to carefully use our taxing power.  The state delegates to every school board the power to tax, and I think this is an awesome power, and one which we ought to use judiciously.    We should only take from our tax payers the amount that is needed to deliver our top notch educational program, and not more.  When we levy taxes on our residents, we are not asking them to make a contribution if they can afford it.  We do not request our neighbor to give more if they can.   No… we compel.  We require.  We force.  And the full power of the state is standing behind us to make sure residents pay.   When that bill comes in the mail, there is no choice, other than how quickly to pay it.

I am willing to use our taxing power, indeed we must use it.   But we should use it responsibly. We should use it with restraint.  We should be respectful of those who are least able to pay.  We should consider those who may be struggling to make ends meet.   We should remember that for all citizens, it is their money that they have worked for, and which they have plans for:  to live on, to save, to pay medical bills, to get through a period of job loss.   We should only take from our residents that which is needed to run our excellent programs.  And no more.

I have heard some in our community voice a concern that the budget before us has a $517k operating deficit.  Why would we want to have a budget with an operating shortfall?  And when I first looked at our 2015-2016 budget, I had the same question.  Who intentionally budgets for an annual operating deficit?

The answer is:  schools do.  And UCFSD has done this for 26 years. 

  • Fact #1:  UCF normally always passes budgets with deficits (draw down of reserves).  UCF has budgeted an operating deficit 24 years out of the last 26 years.
  • Fact #2:  The 2015-2016 budget deficit is smaller than normal.   Fully 20 out of the last 26 budgets have planned for a deficit larger than the one proposed for 2015-2016.  The average budgeted deficit has been $882k, 70% larger than the proposed 2015-16 deficit.
  • Fact #3:  Even though we budget for deficits, we usually end up with a surplus.  77% of the time we have ended the year with a surplus.
  • Fact #4:  We always under-spend.  Not once in 26 years have we spent 100% of our budget.  On average, we spend $1.6M less than budgeted.  

How can this be?  It is because we budget our expenses conservatively.  State regulation of schools encourages this practice.   And as a result, we usually spend 97% of what was budgeted.  If 2015-16 is a normal year, we will end the fiscal year with a surplus of over $1M dollars, and add to our reserves.

Some in our community are worried that if we pass this budget, we will not be able to afford the pay increases that our Teachers’ Union is seeking at the negotiating table.    I have looked at this as well.      I am very confident that any reasonable settlement, even a reasonably generous settlement, with our Teacher’s Union, can be met within our 2015-16 budget, and in years to come. 

In sum, the budget we passed last month is not about the union contract. It is not about cutting programs.  And it in no way puts the future at risk.  

This budget provides every cent required to deliver our great programs and provide a strong education to our students.

The budget funds the full UCF program.

We are very likely to run a significant operating surplus.

That operating surplus can handle all eventualities in the negotiation with our union.

So why would we take more from our tax payers?  We can deliver a great education with our current budget.  We can meet our present and future commitments to our teachers, administrators, and support staff.  And we can do so, likely with an operating surplus at the end of the year.

Why would we take more when we don’t need it? 

To me raising taxes by 2.01% seems like the right balance.  We are not taking more resources from our tax payers than is required, and we are following the prudent financial management practices that have served the district so well over the last 26 years.