Lincoln County Schools

Coffee Talk

April 7, 2010

Program guidelines

• Coffee Talk is a moderated forum of questions and answers.

• All questions will be accepted in written form on the note cards provided.

Program guidelines

• This forum will address questions dealing ONLY state budget impact on Lincoln County Schools.– Issues surrounding specific incidents

or items will be addressed in a separate venue by appointment only.

Program format

• All districts will present information about the state budget impact on local school district finances

• Attendants can ask general questions about the topic presented affecting ALL Lincoln County Schools

• Districts will then break out in individual sessions for presentations and questions and answers affecting your school district

Why are we here?

• To make the public aware of the current financial crisis facing the State of Missouri and ALL Lincoln County schools

• To present facts concerning the issues surrounding budgets and the economy

• To clarify current information and future budget implications

Impact of Budget Crisis

Initial state projections

• State information provided in February– Expect a 2% withholding from ALL

schools

– Elsberry $72,705– Silex $29,071– Troy $437,904– Winfield $126,334

Updated March projections

• State added two more possible options

• Reduce $65 per student• Revert to fiscal year 2006 funding levels for ALL schools

Latest FY 2010 State Withholdings

• Last week the senate voted (HB 2014) to protect hold harmless schools from the latest withholdings

• Hold Harmless is a designation based on a state calculation that guarantees that no school will get less funding on a new formula than they did on the previous formula

• This action means schools who are not Hold Harmless, which includes ALL Lincoln County Schools, will receive bigger state withholdings

Withholdings

Elsberry $156,659

Silex $59,874

Troy $1,258,358

Winfield $261,422

Current Reality for Lincoln County Schools

Schools that ARE NOT Hold Harmless spend an average of $8,364 per student.

Lincoln County Schools spend…

Troy $6,938

Elsberry $7,268

Winfield $7,464

Silex $7,584

Impact of HB 2014

• The average school that is NOT Hold Harmless could lose $92 per student

• The Lincoln County Schools could lose…Troy $205 per studentElsberry $193 per studentWinfield $174 per studentSilex $155 per student

HOLD HARMLESS Schools stand to lose $0 per student

Sources of Revenue

State funding facts• State revenue is based on a

thriving economy – Income and sales taxes

• Fiscal Year 2010 (FY 10)• Net individual income tax = -13.9%• Net sales tax = - 6.6%• Net corporate income tax = - 44.2%

State funding facts

• State General Revenue (FY10) fund is down

Missouri’s Net General Revenue=

- 12.7%

State funding facts

• State budget = May 14– All local decisions associated with

state funding may be delayed or anticipated due to this date

State funding facts

All four districts stand to lose

a total of $1.59 million in fiscal year revenue

State funding facts

• FY 2011 an expected $300-500 million in revenue shortfall

• FY 2011 – Only $218 million available in stimulus money to fund the shortfall

Major Tax Changes That Impacted Individual Income

TaxChange Foregone

RevenueYear

Increased personal exemption

$155 million 1999

State taxation of pensions

$127 million 2007

Dependent deduction

$68 million 1998

Inheritance tax (federal law)

$160 million Phased out over four years in the

early 2000’s

Sources: Fiscal Note (HB 444), Moody 2001 Report

James R. Moody & Associates

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Major Foregone Sales Tax To GR Due To Exemptions or

Earmarks

Tax Exemption Foregone Revenues

Year

Prescription drugs $190.3 million 1980

Motor vehicle sales tax

$110 million 2005 to 2009

Food $210.4 million 1997

Domestic utilities $192.4 million 1980

Manufacturing sales tax

$70 million 1998

Internet sales ???

James R. Moody & Associates

19

Funding reality

2009-2010 Versus

2010-2011

Local funding facts

• All of four districts have spent down reserves

• All four districts will have limited ability to spend down reserves in the coming years

• All four districts have government required expenditures– Special education, professional

development, Title I, etc

Local funding facts

• All four districts have experienced a plateau or decrease in assessed value growth

• Assessed value directly impacts the amount of local dollars available for schools

• Assessed value (tax base) x tax rate = local dollars available for students

Funding follies

• Gambling money– 1986 – gambling proceeds are

funneled to Missouri schools• Gambling proceeds were simply placed

in the State General Revenue• Gambling proceeds replaced original

funding, which was funneled to other state entities

• Proposition A – Proceeds used as part of foundation formula

• No gaming revenues have actually increased school funding

Questions?