Long-term fixes

Long-term fixes: focus on SEEK, educators say

 

December 2017

 

By Madelynn Coldiron
Staff writer

When it comes to finding more long-term ways to help school districts that are struggling financially through no fault of their own, district leaders have the SEEK allocation formula squarely in their sights.

“It’s a problem when SEEK is based on if you are an industrial county and you’re growing and you’re getting a lot of people employed and everybody’s making good money, then we’re going to lower your taxes,” said Harold Morgan, chief information officer for Leslie County Schools. “But if you’re laid off and there’s no jobs, then we’re going to double your taxes. How do you put a double tax burden on everybody here that’s just got laid off and is struggling to buy groceries? There’s something wrong with that.”

That is the situation for Leslie and some other eastern Kentucky districts that have long collected local revenue from the property tax on unmined coal, which has now dried up, as well as other districts that have had the economic rug pulled out from under them locally, either suddenly or over time.

In far western Kentucky, Fulton County suffers from a cash flow issue caused by overall population loss and an agricultural tax base. Even a growing enrollment isn’t making up for those factors, Superintendent Aaron Collins said.

“In my opinion, I believe SEEK – the way that it was created and the formula that was created was good intentions in that overall assessments would go up with the cost of living. So long as assessments go up, there’s no problem with the formula. But we’re now approaching year five, but definitely year four, four years of total tax assessment loss. Even taking the 4 percent doesn’t make up for the loss compounded year after year after year in loss of assessments,” he said. “You can’t make it up quick enough.”

Leslie County Schools Superintendent Linda Rains is looking for a more equitable system that takes individual circumstances into account.

“I think we need to go back to what is a more equal way to fund schools across the state and taking into account the uniqueness, not only of eastern Kentucky and what has to happen here, but you have western Kentucky and even issues in Boone County with the surplus there,” she said.

She and Morgan describe a “trigger” system to overcome situations in which a district revenue loss is so great that the local tax rate just can’t be raised high enough or quickly enough to make up for it. If a district loses a certain percentage of assessed value, “then SEEK should shore that up in some way rather than put a burden on a county that’s already starting to see economic depression with layoffs and things,” Morgan said.

Because the local tax effort would be considered inadequate, that trigger would also protect such a district from losing state Tier One funds, designed to equalize funding between property rich and property poor districts, Rains said.

Nancy Ratliff, Pike County Schools’ finance director, envisions something similar when a district can meet certain criteria in terms of losses in its two major strands of funding: average daily attendance money from student enrollment and property tax dollars.

“In the funding formula, there should be a way that recognizes when you lose a certain percent of your funding sources – both primary funding sources – that something kicks in to help you transition, to give you time to plan,” she said.

Magoffin County Schools Superintendent Scott Helton had a couple of other suggestions apart from the SEEK formula. First, he said, stop new unfunded mandates from Frankfort. Then, he said, when the local tax base takes a huge hit – as in the case of the unmined minerals tax – ensure that the state authorities governing that source of revenue phase in the changes. Such a phase-in did not occur when the state Department of Revenue amended the factors it uses to assess the taxable value of unmined coal, which were put into effect in the middle of a fiscal year with no notice to districts.

“Give us time to adjust,” Helton said. “Because when you have to make quick decisions, then you hurt students.”