Baker School District considering tax levy to bolster budget

By Chris Collins January 07, 2011 11:30 am

Baker City Herald

This month the Baker School Board will begin considering ways to raise additional money to maintain programs, including the possibility of asking voters to approve a property tax increase in the May election.

Superintendent Walt Wegener said in an interview at his office earlier this week that he will recommend that the school board take the tax measure to voters this spring.

The measure would raise up to $725,700 per year in new property taxes over the next five years to bolster the district’s general fund.

Without that money the district would have to eliminate jobs to balance its budget, Wegener said.

The $725,700 figure represents salary and benefits for 14 teachers, although cuts would across the board, including supplies and materials, and not limited to teachers and other staff, he said.

“The state Legislature has left us with no option but to ask people to tax themselves to support their schools,” Wegener said.

The board probably will not decide until its March 8 meeting whether to put a tax levy on the ballot, Wegener said.

March 17 is the filing deadline in order to qualify for the May 17 election.

A simple majority of voters would be required to pass the issue, according to the County Clerk’s Office.

The levy would not be subject to Oregon’s “double majority” law, which requires for some tax increases both that a majority of voters approve the measure, and that more than half the eligible voters return their ballots.

“The board is very tentative,” about raising taxes, Wegener said. “We’ve really been backed into a corner we don’t want to be backed into.”

Damien Yervasi, board chair, declined to comment on the tax plan Thursday. He said he would have more to say about any potential revenue-generating plans or spending cuts after the board’s February meeting, when directors will have more information about long-term planning.

If proposed by the district and passed in the May election, the local option tax would be added to the 2011-12 tax bills of county residents who live within the Baker School District boundaries, Baker County Assessor Kerry Savage said.

There is no simple formula to determine how much would be added to each taxpayer’s property tax bill if the measure were to pass, Savage said. The amount is different for each property owner based on real market value, assessed property value and what’s known as “compression.”

Ballot Measure 5, passed by Oregon voters in 1990, put a limit on property taxes through compression. Under the law, property owners pay a maximum of $5 per $1,000 of real market property value to support education.

Baker School District property owners pay a portion of their tax bill to support the 5J School District, the Union-Baker Education Service District and Blue Mountain Community College to that maximum rate of $5 per $1,000.

Taxpayers who are at the maximum $5 rate — under compression, as it were — will not see their property taxes rise if voters pass a 5J tax measure.

Property owners who are below the $5-per-$1,000 compression ceiling would pay more. How much more would depend on each property owner’s circumstances, Savage said.

(The chart on Page 1A explains the calculations property owners can use to estimate how much they would pay.)

Also, the actual cost to property owners will fluctuate based on each year’s assessed value, which in most cases increases at a rate of 3 percent per year, and real market value, which Savage said probably will fall slightly in the coming year, as it did the previous year.

Farm or timber properties with special assessments would see taxes increased based on their Ballot Measure 5 special assessments to the compressed $5 per $1,000 rate, Savage said. Some of those property owners also would not see their property taxes increase because they already are paying the maximum rate.

In addition to considering ways to raise revenue, the board also will be discussing plans for reducing school district operations, Wegener said.

“We’ll ask the board for a target number for cuts and then the administrative team in January and February will gather information about what it looks like to shrink the district,” Wegener said. “We’ve maintained a system that might be a little larger than we can afford.”

Discussions will include the possibility of a wide range of reductions, including a four-day school week, and trimming staff and other expenses.

“We’re going to be looking at ways to sustain excellence even if we have to make cuts,” said Doug Dalton, the district’s chief financial officer.

Gov. John Kitzhaber, who begins a new four-year term this month, has announced a budget that calls for a 6 percent cut to education. If adopted by the Legislature, that would mean a revenue reduction of $850,000 to the Baker School District.

Combined with the loss of federal stimulus money and forest payments and a 6 percent increase in Public Employee Retirement System contributions, school district administrators will be contemplating cuts of between $1.5 million to $2.3 million in the 2011-12 year.

Dalton said the district’s administrative team will work to create a strategic plan based on a five-year financial forecast that looks at future challenges.

Dalton said enrollment projections also will be taken into account. The state gives school districts money through a formula based on enrollment, at a rate of about $6,000 per student.

Therefore, more students equals more state dollars for Baker schools.

But because of a downturn in the economy, local student numbers have continued to drop as families leave the community to look for work elsewhere. Wegener and Dalton said economic development that would create new jobs could help reverse that trend.

Maintaining high academic standards and award-winning extracurricular activities, such as a state championship football team, also help the district recruit students who might otherwise choose private school or home-schooling programs or transfer to other districts.

Donations and grants also could help bolster district revenues.

State money accounts for 65 percent of the Baker School District’s general fund, with property taxes making up another 24 percent. Federal forest payments added 1 percent; stimulus money, 4 percent; beginning fund balance, 2 percent; ESD, 3 percent; and other revenue, 1 percent.

The district’s greatest general fund expense — 70 percent — goes to paying its employees.

“There’s so many ‘what ifs’ out there that we are totally waving in the wind,” Wegener said. “But we’re going to be prepared.

“We’ll do the best we can to keep (the cuts) as far away from kids as possible,” he said.

The school board will meet on Jan. 18 to continue the discussion about the budget.

A work session will start at 5:15 p.m. that day during which directors will discuss the possibility of changing to a four-day school week. The regular meeting will begin at 6 p.m. Both meetings will be at the District office, 2090 Fourth St.

The board will begin setting funding priorities at its February meeting prior to budget committee meetings this spring, Dalton said.