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Francis Howell School District Debates Potential Tax Increase

With decreased revenue, the Francis Howell School District may have to raise taxes.

Declining revenue from the government and property taxes has the Francis Howell School District searching for more money to cover expenses. The answer may be a tax increase.

The Board of Education will vote on the tax rate for the next year at the Sept. 15, 2011, meeting. In order to gear up for the vote, the Board was presented financial documents from Chief Financial Officer Kevin Supple. The documents showed the District having increased expenditures every year but fairly steady revenues. The results, according to projections, are significant losses in fiscal year 2015 and 2016 totaling more than $28 million.

Supple said the goal for the District as it relates to the tax rate is to remain revenue neutral. For example, if the District revenue was $10, the goal is make sure the tax rate gets the District up to $10. 

"All of our projections are based on revenue neutrality," Supple said. "We want to be revenue neutral."

Supple's presentation showed that the District actually turned a profit in the recently completed fiscal year and stands to turn another profit this year to the tune of $2.4 million dollars. The profits for fiscal year 12 are mostly because of the recent budget cuts the District made.

"We are in a positive territory because we made significant cuts to our expenditure," Supple said. "... It's not because we're getting new revenues."

The profits, however, quickly disappear. Fiscal year 13 starts a losing trend that continues until the end of the projections. To avoid the losses, the Board will need an increase in revenue. The schools won't be getting the money from property taxes.

The assessed valuation of property was $1,975,092,667 on Dec. 31, 2010. Since then, property values have tumbled. The current value is 1,905,891,660—a loss of nearly $70 million.

Supple said that school also can't count on the state of Missouri or the federal government to pick up the slack. He pointed out that the state should have given Francis Howell $5.3 million in transportation money. Instead last year the District only received $1.9 million.

The picture Supple painted showed that in the future, the District is going to need more money in the future and that will likely come from another tax increase—the Board voted to increase taxes last year. When the increase comes in the question. 

As he often does, Board Director Mark Lafata disagreed. Lafata said that, with projections showing the District making money this year, the Board shouldn't ask tax payers for more money this year. 

"From where I sit, this is a money hungry Board," he said.

Lafata suggested that instead of a revenue neutral tax rate, the District should instead look into a budget-neutral tax rate. His idea would have the taxes equal the budget, instead of the revenue, so the District wouldn't gain or lose money. 

Supple that for this year, yes, Lafata's idea would work. But taking a long-term look, the District would be giving up money it could need later. Plus, current laws said that if the District voluntarily rolled back taxes this year, it can't roll it forward the next when it will need more money. 

"I agree with Mr Lafata if we knew this District was going out of business in 2012," Board President Mike Sommer said. "It's very shortsighted to just look at this school year."

Lafata claimed he was the only Board member who looks out for the taxpayers. He said that a recent $20 million bond that was passed by voters in 2010 was not needed. In his opinion, the District put itself more in debt by selling the bond and is now struggling to find projects to fund. 

Other members of the Board countered the Bond was sold at a time when interest rates and construction costs are very low. Board director Mike Hohen said by selling the Bond when it did, the District was able to get more bang for its buck. Projects that are being done now are being done cheaper than they would be in the future. 

Supple's full report can be found here. The Board will vote on the tax rate at the Sept. 15 meeting. 

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