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Deputy superintendent advocates tax-rate hike as a solution for Mehlville's fiscal woes



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Jane Reed
February 23, 2005 - By SCOTT MILLER

Staff Reporter

Retiring Deputy Superintendent Jane Reed advocates a tax-rate increase as a solution for the Mehlville School District's fiscal woes.

The district must shave $3 million from its operational budget to maintain a 5 percent balance, or about $4 million, at the end of the 2005-2006 school year, Reed told an "action team" of residents charged with creating "action plans" to improve school finance.

"The challenges of the operational fund are large and they are ongoing," she said last week. "The assessed valuation for each Mehlville student is average for St. Louis County. Our (tax) levy, however, makes the funds available, the per-pupil expenditures and our fund balances some of the lowest in the county ...

"So to me, if you ask Jane Reed, to solve this issue, the challenge of the operation fund, I think we have to look directly at that piece of it," she added.

Currently, the district's tax rate, including the debt service levy, is $3.95 per $100 assessed valuation, the sixth lowest in the county. Mehlville spends $6,533 per student, fourth lowest in the county, according to information district officials gave the Long Range Planning Committee.

Last year, district officials cut 42 teaching positions and six administrators, canceled more than 80 field trips, reduced textbook expenditures by around $500,000 and cut nurses and nurses aides, among other cuts, Reed said.

"... A dollar saved last year equals two dollars this year," she said.

Without additional revenue, the district may consider reinstituting activity fees, reducing transportation services or increasing class sizes, Reed said.

"As you can see we start to look very quickly at the direct services that we're able to provide for families in our district," she said. "I think it's important that we illustrate those not to make people afraid or worried but that we understand very clearly what the choices are to live within our means."

And officials want to maintain a 5 percent balance to minimize the borrowing Mehlville must do each year as it waits to receive property tax disbursements from the county. To avoid borrowing, Reed said the district would need a 10 percent to 15 percent balance, or between $8 million and $12 million.

The district's current 5 percent balance is enough to pay about three weeks of salaries, said Randy Charles, assistant superintendent for finance and the district's chief financial officer.

By borrowing, the district spends about $40,000 per year in interest, which "is one of the worst ways to spend education money," he said.

Voters last approved a tax-rate hike in November 2000 when they approved Proposition P, a nearly $68.4 million bond issue funded by a 49-cent tax-rate increase.

However, the Board of Education voted last November to approve a revised Proposition P budget of $88,927,440.

The Prop P levy expires when the bond-like certificates used to fund the project are repaid, which is scheduled to be 2022.

Charles said even with the nearly $21 million in "unforeseen" costs, the 49 cents will generate about $11 million more than needed to fund the projects. That money is not specifically dedicated, but only can be used for capital improvements and cannot affect the district's operational budget.

And, Charles added, the district has the capacity to borrow another $177 million in the form of bonds.

"There's a Missouri statute that identifies the amount of bonds a school district can issue and it's 15 percent of your assessed valuation," Charles said. "When you compare the amount we legally can issue minus what we have already issued, our remaining bond capacity is about $177 million ...

"It's kind of like you're pre-approved for a loan to buy a house that's $250,000 but we currently have a loan on a $45,000 house," said Charles, who becomes superintendent of the Hillsboro School District on July 1. "That kind of gives you the perspective of how much bond capacity we're not using."

Before Prop P, voters approved the elimination of the Proposition C sales-tax rollback in the operational levy, allowing Mehlville to collect 34 cents previously rolled back.

Voters last approved an operational tax hike in 1986, a 62-cent proposal that also reduced the district's debt-service levy by 27 cents. Two bond issues also won voter approval; one in 1998 and one in 1992.

Between 1986 and 2000, Mehlville asked residents for tax increases 16 times — five passed, according to information provided by the school district.

"Before you talk about a tax levy, I think this community would demand it to be very, very specific about what you want to use it for," Charles said.

"One of the big challenges is going to be to change the community's perception of what's really going on in the school district, whether or not that's the media," said Scott Tate, the parent co-facilitator of the finance action team.

After listening to the comments from Reed and Charles, the action team discussed several possibilities to curb Mehlville's cash problems, including a "well-defined" tax-rate increase.

Other ideas tossed around were:

• Seeking corporate sponsorship of programs or facilities.

• Creating an endowment fund of community and alumni contributions.

• Lobbying state lawmakers to change the education-funding formula.

• Establishing a grant-writing council to secure aid.

• Sharing fixed costs with other school districts.

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