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How bad is it?

How bad is it? "Everything suffers"

Kentucky School Advocate

December 2017

By Madelynn Coldiron

Staff writer

Leslie County Schools' Local Tax Revenues

You name it, they’ve cut it, consolidated it or postponed buying it – from not replacing older school buses to leaving positions vacant when someone has retired to draining their contingency fund, closing school buildings and combining bus routes. But it’s hard for school districts to offset the loss of unmined coal tax revenues, lower property values, dwindling enrollment and anemic tax collections.

“Everything suffers,” said Leslie County Schools Superintendent Linda Rains. “Keeping technology at the rate that students need suffers. Resources in the way of any STEM or STEAM opportunities go away. All the arts, humanities are jeopardized, if we have any at all, in the few places we have it. We want to keep cuts as far away from students as possible, and you can say that and I believe that with my whole heart, but at the end to keep them in the seats with heat and toilet paper and the four cores being taught, everything else becomes jeopardized.”

When the state Department of Revenue recently adjusted the factors by which it assesses the taxable value of all unmined coal in the state, the Leslie County district, two months away from the end of the fiscal year, abruptly lost those revenues it had budgeted and SEEK, the basic allocation formula for state school funds, was not adjusted accordingly to help make up for it. The district has played it safe and not budgeted any unmined coal revenues this year “because it’s so volatile,” Chief Information Officer Harold Morgan said.

“I think with the right decisions and some attrition and possibly a few layoffs, we can stay in the positive, not by much, but we can stay in the positive,” Morgan said.

Pike County Schools' year-end contingency fund

“It’s dicey,” said Pike County Schools Finance Director Nancy Ratliff. The district, the largest geographically in the state, ended the last fiscal year with a $300,000 unreserved fund balance. “When I woke up on July 1, I had bills of $1.4 million to open the schools for the new year, to pay the start-up costs,” she said.

State education department consultants have been “very helpful” in assisting the district to identify ways to trim, Ratliff said. The district has closed and consolidated some schools, among other steps. “We’re looking at every opportunity to consolidate,” she said. “We’re trying to reduce bus routes, which is hard to do in a county that drives just over 10,000 miles a day.”

A taxing situation
The unmined coal assessment crisis has put financially struggling districts in a surreal situation. The annual property tax rate-setting formula would have required Knott County Schools to double its actual tax rate this year just to achieve the compensating rate – meaning the same amount of local revenue the district received last year without any actual growth in funds to meet growing expenditures. “All our board members wouldn’t vote for it. They couldn’t,” said Superintendent Kim King. “No one can pay that right now. There’s nothing moving here. There’s no economy. When the coal business left, everybody’s job left.”

Knott County Schools' unmined coal tax revenues

“People aren’t working so they’ve got to decide whether they want to pay property taxes or eat,” Knott County Finance Officer Gregory Conn added. “We’re going to survive this year. Going into next year depends on how things come in this year and how things play out next year.”

The Magoffin County school board has similarly had to raise its property tax rate the last two years. Superintendent Scott Helton said in addition to the economic hardship, the situation also risks driving a wedge between the schools – and current school board members – and the community, he said.

“The other thing this does to us that a lot of people don’t talk about, it’s putting the burden back on our local school districts to try to fund themselves from a community that can’t afford it,” Helton said. “So we’re becoming the bad guys because we’re having to try to keep the doors open, try to keep people working, try to do the right things for the students. And we’re having to set tax rates that are outrageous on these small communities.”

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