Note: This story was last updated at 11:12 a.m. May 27.
The Oak Ridge Board of Education on Tuesday approved a budget that would use $1.75 million from the school system’s fund balance and ask the city for about $650,000.
Those two actions would help Oak Ridge Schools cover a deficit of roughly $638,000 and meet a total of $1.75 million in other desired expenses, or “additional investment,” including:
- about $1.1 million for 3 percent pay raises with benefits,
- $484,000 for step increases based on experience, and
- approximately $211,000 for staff, including a communications director, four technology-related positions, and a teacher’s assistant for an elementary behavioral class. The four technology-related jobs include an instructional technology coach, an applications administrator, and two technology technicians.
The proposed budget was unanimously approved on a voice vote by the five-member school board during a Tuesday evening meeting. It will be considered by the BOE on second and final reading on Thursday.
“This is a rather large use of our fund balance,” Oak Ridge Schools Superintendent Bruce Borchers said.
But the budget “is tight. It’s incredibly tight,” Borchers said earlier in the meeting.
He said the number one priority is to attract and retain high-quality staff.
Oak Ridge School employees received no cost-of-living increases in four of the last eight fiscal years. They received raises of between 1.5 and 3 percent in the other four years.
School officials said the starting deficit is due to revenues not keeping pace with expenditures. They said they might be able to save money on the communications director position by sharing an employee with the city.
School officials said a total of about $2.11 million could be used from the fund balance in Fiscal Year 2016, which starts July 1. Besides the $1.75 million used to help offset the deficit, that includes $361,000 for technology initiatives and capital expenses.
Use of the $2.11 million would leave about $2.5 million in the general fund balance for operational cash flow requirements and $200,000 for emergencies, school officials said. Borchers said the school system would be able to meet cash flow requirements, but not be able to cover certain capital investment requirements, such as having to buy new air-conditioning units.
If approved by the BOE on Thursday, the request for more money from the city would still have to be approved by the Oak Ridge City Council.
Oak Ridge City Manager Mark Watson, who attended the school board meeting, said the $650,000 requested by school officials would require the equivalent of about a six-cent increase in the city’s property tax rate. Each penny in the property tax rate generates about $100,000.
He said city officials are striving for a no-tax-increase budget, as recommended by the Budget and Finance Committee. But it may be difficult to do so, Watson said. He said there has been a dramatic drop in sales tax revenues for the city from Roane County, primarily from Oak Ridge National Laboratory sales taxes. Those revenues are down about $600,000 over a year, said Watson, who will present the municipal budget to the Oak Ridge City Council on Monday.
The ending budget will have a shortfall, he said. And it’s not clear when the five-year property re-assessments in Roane County will be complete, meaning the City Oak Ridge may not have a tax rate adopted by July 1, the start of the new fiscal year. The western portion of Oak Ridge, including ORNL and East Tennessee Technology Park, is in Roane County.
Oak Ridge Schools will also present their proposed budget to City Council on Monday.
The City of Oak Ridge provides a little less than one-third of the school system’s funding. Other funding sources are the state and federal government and county tax revenues. The amount currently allotted to the schools from the city is about $14.3 million.
The Oak Ridge Board of Education agreed in March 2014 to use part of the fund balance to replace the visitor bleachers at Blankenship Field and agreed to use more in August to restore bus service to some stops that had been temporarily cut.
The fund balance is meant for emergencies and to fill in funding gaps for payroll and bills, and not for recurring expenses. Borchers said the money would be used for one-time expenses in this case.
Watson compared the revenue picture to peaks and valleys. We’ve come off a mountain, are in a valley, and could be back up at on a peak sometime early in 2017, he said. But the city and schools will need to sustain operations for the next two fiscal years, the city manager said.
Even if there are new tax revenues from new retail at Main Street Oak Ridge by Christmas 2016, the city and schools won’t get that money until April 2017, he said.
The Oak Ridge Board of Education will consider the school system’s proposed budget at 4:30 p.m. Thursday, May 28, in the Board Room at the Robert J. Smallridge School Administration Building at 304 New York Avenue.
See the proposed budget for Fiscal Year 2016 here.
More information will be added as it becomes available.