Revenue discussion begins annual budget process

Revenue discussion begins annual budget process
Posted on 04/07/2021
Tahoma School District’s budget outlook for the 2021-2022 school year is beginning to take shape, as district leaders conduct a series of meetings with the School Board that will result in budget adoption on July 27.

During a School Board work-study meeting Tuesday, March 30, Assistant Superintendent Lori Cloud reviewed information from a recent report by demographer William Kendrick that provides enrollment trends and population projections for the Puget Sound region, as well as for Tahoma. The report shows that districts throughout the region lost enrollment as a result of the coronavirus pandemic, but it projects that Tahoma School District will regain most or all of its enrollment loss in the 2021-2022 school year.

The report offers low, medium, and high range estimates of future enrollment, which the district uses to estimate how many teachers and support staff will be needed. Cloud asked the School Board to discuss which of the estimates it would recommend using as part of the budget process. Each board member said they prefer the medium estimate, which projects enrollment increasing by about 479 students next year. That would bring Tahoma’s enrollment to 8,654 full-time equivalent (FTE) students. FTE is used for budgeting, because it reflects the actual number of hours students receive instruction, rather than the “head count” that measures the total number of students, regardless of whether they attend full time.

Student enrollment determines how much revenue the district receives in state education funding, which is known as state apportionment. Tahoma bases its anticipated revenue on projected enrollment. When this year’s enrollment fell short of projections, the district used some of its fund balance reserve to meet expenses.

Another major source of funding for the district comes from local levies. Voters approved two levies in 2020: an Educational Programs and Operations levy and a Technology levy. Property owners will see those levies for the first time on this spring’s property tax statements. The district set a maximum dollar amount for each levy collection and, prior to the Feb. 11, 2020 election, explained the estimated cost to property owners. The EP&O levy was estimated to cost $2 per $1,000 of assessed valuation to collect $16.4 million; the Tech levy was estimated at 47 cents per $1,000 of assessed valuation to collect $3.9 million. The levy amounts and rates were calculated according to estimated total assessed valuation of property in the school district. Actual value is lower than estimated, which means the district will collect less money than expected if it uses the tax rates that were advertised to voters. Over four years, the district would collect about $1.5 million less for technology and $6.6 million less for operations.

Cloud explained that the district could raise the collection rate in order to receive the full amount of local property taxes that voters approved. After discussion, School Board members said they agree with a recommendation by Superintendent Mike Hanson to keep property tax rates that were advertised to voters, even if it means the district will collect less money.

Cloud told the School Board that the impact of reduced funding from local levies will require use of the fund balance reserve to supplement state, local and federal funding. She said there will be a need to adjust revenue and spending in future years in order to balance the budget and avoid exhausting the fund balance reserve.

The School Board will receive more details about revenue and expenditures during the next three budget meetings, on April 13, 27 and May 18.
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