Legislative fix misleads school district budgets
By Audrey Spalding
Show-Me Institute
 The difference between S.B. 711–mandated March property value estimates and July numbers amounted to a 9-percent decline. In the coming month, school district administrators may have to rework their budgets as a result. |
Twenty-three of the 24 school districts in Saint Louis County had an unwelcome surprise on July 1. Their primary source of tax revenue — property values within district boundaries — had shrunk below the county Department of Revenue’s March estimates.
Of those 23 districts, 20 saw commercial property value decreases of more than 5 percent, according to county documents. Wellston School District was hardest hit, with a decrease of 33.3 percent. You can download a spreadsheet comparing estimates with July numbers here, and see county source documents here.
The current economic recession is likely to blame for the drastic fall in real estate prices. However, an earlier deadline required by recent legislation, Senate Bill 711, may be at fault for causing school district administrators to base budgets on stale information.
Before S.B. 711 was passed in 2008, assessors could give school districts property value estimates as late as May.
“All taxing authorities had to come up with an estimate by February or March,” Tim Lee, assistant collector for St. Louis County, said. “The problem is the assessor is not done with assessments at that time.”
“[S.B. 711] required all tax authorities to come up with a guess,” he said.
The earlier deadline has real consequences for school districts. If school district administrators finalized their budget using the March estimates, they will likely find themselves reaching into district reserves to make up the difference, or making budget cuts. Generally, teacher and other personnel costs make up about 80 percent of a school district’s budget.
At the Lindbergh School Board’s most recent meeting on Tuesday, Assistant Superintendent Patrick Lanane said the discrepancy would result in at least $1.3 million less in district revenues for the coming school year, which the district had counted on in its 2009–2010 budget. “The system set within 711 is broken,” he said.
Brentwood Superintendent Charles Penberthy said his district faces the same challenge. Brentwood administrators had set the coming school year’s budget based off of the March estimates, he said.
“Our assessed valuation went down significantly, especially from commercial property,” Penberthy said. “Overall, we went down about 9.5 percent.”
When asked whether school districts could trust the March estimates, Lee said, “It is what it is. If you talk to the assessor, clearly he knew for a fact that those wouldn’t be the numbers for July. Everybody knew that.”
Penberthy said that it would have been better and more accurate to use property value estimates made later in the year.
“It makes us look bad when we don’t give correct information, and it’s because we weren’t given correct information to make our projections,” he said.
While Lanane recommended to Lindbergh board members that the district consider a Proposition C rollback — a measure that would allow the district to keep a portion of state income tax revenues it usually gives back, Penberthy said Brentwood would “probably use our reserves to fund our programs this year.”
For now, Lee said, S.B. 711 affects only the city of Saint Louis, Jackson County, Saint Charles County, and Saint Louis County.
“We’re the guinea pigs, so to speak,” he said. “The rest of the state has until 2011.”
