In a year cursed by global economic uncertainty and a brutal local tax revaluation, the Orange County commission was never going to come up with a budget that made anyone happy. And indeed, at the end of their monthlong process, the commission settled on a roughly $306 million spending plan that increases taxes but still falls slightly short of the continuation needs of the county’s two K-12 public school districts.
The budget, approved on Tuesday night, technically lowers the county tax rate (from 86.34¢ per $100 of assessed value to 63.83¢ per $100), but residents are still set to pay more thanks to a revaluation causing property values to jump by more than 50 percent on average. That rate is about 1¢ above the revenue-neutral rate of 62.64¢ per $100.
Citing a likely state-mandated teacher salary increase as well as hundreds of thousands of dollars in increased operating costs, Chapel Hill-Carrboro City Schools (CHCCS) and Orange County Schools (OCS) requested increases from last year’s budgets of $3.2 million and $1.8 million, respectively, from the county. Those increases, known as continuation costs, would allow them to maintain their current levels of service.
They also submitted wish lists for new expenditures, or expansion costs, that were all but ignored in this year’s budget crunch.
Ultimately, the commission decided to pay for nearly all of the $47 million OCS continuation budget but fell about $1 million below CHCCS’s $66 million continuation needs. Initially the commission was on track to short CHCCS by nearly $2 million, but it closed the gap by setting the special education district tax on Chapel Hill-Carrboro residents just above the revenue-neutral rate to 14.79¢ per $100.
CHCCS has been relatively quiet about what that $1 million shortage will mean for students.
“Until the General Assembly adopts a final biennial budget, we cannot determine with precision the funding picture from which we’ll be working,” CHCCS spokesperson Andy Jenks told INDY.
“That said, the difficult decisions that were made during our reduction-in-force process will help close this gap. Our intent is to use the resulting savings to replenish our fund balance. … However, some of that savings may need to be redirected to support next year’s operational needs.”
At a meeting in April, CHCCS CFO Jonathan Scott said that if cash became short due to surprises in the state budget, the district would first try to use its fund balance to absorb the blow.
But the district’s fund balance sits at just a few thousand dollars (or, in finance terms, essentially zero), so “we would really have to look inward and begin to talk about specific programs and positions and reductions,” said Scott. (An OCS spokesperson couldn’t be reached about that district’s plans for absorbing its $400,000-plus shortfall.)
At a June 5 budget meeting, county commissioner Phyllis Portie-Ascott highlighted the commission’s central struggle this year: Is it worth raising taxes, which will impact the county’s poorest residents, in order to pay for public school services that also serve the county’s poorest residents?
“They value education, yes,” Portie-Ascott said of the county’s residents. “And they value having a home for the students to live in as well.”
The difference between the county’s two school districts always makes for a bit of an awkward conversation for the equity-minded progressives who run the local government, and this year was no exception.
Chapel Hill and Carrboro, nestled in the southeastern corner of the county, are wealthier than the rest of the more rural area that sends its kids to OCS. The county funds the two districts at the same per-pupil expenditure ($5,877 in this year’s budget), but CHCCS residents pay a special tax that helps push the district’s local per-pupil expenditure to the highest in the state (roughly $8,500), which certainly helps CHCCS also consistently top the list of the best districts in the state.
No other county in the Triangle area even contains more than one school district.
“There’s a difference between the southern and northern part of the community as far as how they view what they can pay for,” commissioner Jean Hamilton said at the June 5 meeting. “And so I think the special issue tax reflects that and that that’s appropriate to use in these situations.”
Initially, commissioner Amy Fowler had proposed a higher tax hike for the special district in order to come closer to meeting the CHCCS continuation request. But many commissioners at the Thursday meeting, including board chair Jamezetta Bedford, seemed uncomfortable with that increase given some of the recent decisions of the CHCCS school board and the lack of a fund balance.
“I am concerned about the school board’s decisions, and the fact that they have chosen not to close an elementary school,” said Bedford, referring to the struggles many districts face over whether to consolidate schools in order to save money as their enrollment numbers decline. “You don’t want to harm children, but I do believe the school board needs to really rightsize their budget.”
Bedford ultimately supported the smaller increase, though. Portie-Ascott and Earl McKee voted against any increase at all in the special district tax in one of the only nonunanimous votes in the budget amendment process.
“In one respect, I commend the folks in Chapel Hill for doing the tax,” McKee said. “But I cannot support it because it does create an inequitable situation between the funding of the two systems in Orange County.”
Reach Reporter Chase Pellegrini de Paur at [email protected]. Comment on this story at [email protected].