Schools’ financial crisis continues

If that’s the case, those systems won’t be alone. According to state data for all Georgia school systems, for the first time ever the systems collectively spent more per student than they collected in revenue last year. That data indicates a serious financial crisis is ahead for many school systems due to a collapse in revenues.

Many systems had already been drawing down reserves to balance their local budgets, but the dramatic decline in income last year portends even worse days ahead for many public school systems.

Across the state, per pupil average spending hit a high in 2008 at $8,965 per student. Last year, that average had fallen to $8,558 per student, a drop of 4.5 percent between 2008 and 2012.

But it was in revenues statewide last year that the real decline happened. Revenues on a per student basis hit a high of $9,120 in FY2008. Last year, revenues per student across the state had fallen to $8,486, a drop of seven percent.

So while many systems across the state have been cutting spending, it hasn’t been enough to offset the dramatic drop in income and the increase in students in many systems. Revenues fell last year at a faster rate than the cost cutting, a trend that can’t be sustained as systems use up the last of their reserve funds.
The drop in revenues has been due to both state cuts in funding to local school systems and to the collapse of the local tax digest in many communities, neither of which local school boards can control, unless they raise their local property tax rates. But with some systems’ rates close to the 20-mill cap, even that may not be enough to stem the flow of red ink unless there are even more cuts in spending.

In Jackson County, a combination of lower revenues and higher spending has caught some school leaders off guard.

The Jackson County School System had a financial collapse several years ago when it used up all of its reserves and had to borrow money to make ends meet. At the time, the system was spending over $10,200 per student, among the highest in the state.

After the financial collapse, the system cut spending for a couple of years to get back in the black. By FY2011, the system had cut its per student spending down to $8,600 per student.

But as soon as the immediate crisis had passed, the system again ramped up its spending last year. For FY2012, school administrators raised spending by eight percent up to $9,273 per student. That made the system the second highest in the area in per student spending last year.

The problem with that is that the system only took in $8,887 per student in revenues, four percent less than it was spending. It took in less due to the lower tax base and to cutbacks in state funding. Together, that cut revenues to the county school system by six percent per student in FY2012 from FY2011. But at the same time, the system increased spending by eight percent.

That recipe — increase spending while taking in less money — is a disaster in the making and is the reason new county school superintendent John Green has been aggressively cutting spending since taking his job last summer.

The City of Jefferson School System isn’t as bad off, but it too has seen both its spending cut since 2008 as its revenues fell. Last year, however, the Jefferson system increased spending from the year before by three percent. The problem is that its per student revenues fell by six percent.

As with the county school system, Jefferson spent more per student than it took in last year. Jefferson’s big problem, however, is that it already spends the lowest per student in the area and is among the lowest in the state — it has little room do much more cutting.

The City of Commerce School System did cut its per student spending last year from the year before, but it wasn’t enough. The cut was one percent while the decline in revenues fell seven percent. That system, too, spent more per student than it took in.

So what does all of this mean?

Both across the state and in our local school systems, the funding and spending crisis isn’t over. School systems are struggling to stay afloat and the local systems are no exception.

Some of the problems the systems face were self-inflicted from a lack of discipline in spending habits (the Jackson County system is a prime example of excessive spending.) But much of the problem is simply due to the economic collapse that drove down state funds and shrunk local tax digests.

There are no easy answers to any of this and more problems loom. When school systems craft their budgets this summer for FY2014, don’t be surprised to hear a lot of moaning. An ugly financial picture is emerging.

Mike Buffington is co-publisher and editor of The Jackson Herald. He can be reached at mike@mainstreetnews.com.