Anticipating a tax-revenue windfall after countywide property reassessment, the Beaufort County Board of Education returned about $3 million to the county in September.
But the Beaufort County School District is not feeling so flush these days.
Six months later, the district has a shortfall of about $4.2 million in its 2013-14 budget, and the board is trying to figure out how to make up the loss before turning its attention to next year's budget.
The problem: "We have been watching tax collections for the last few months and were seeing that something didn't look right," district chief operational services officer Phyllis White told the board Friday on the first day of a two-day work session. "Now, our mill value has dropped dramatically."
February's tax collections were half of what they have been in past years, leading to $4 million less in taxes than the district was expecting, White said.
One likely reason, White said, is the reassessment, effective when property-tax bills were issued late last year, in which property values in northern Beaufort County rose and those in southern Beaufort County dropped.
The county also is in the midst of a continuing shift in which more homes are taxed as primary residences and fewer are taxed as second homes or rental properties. Second-home owners pay a higher tax rate, which provides much of the district's tax base.
The revenue shortfall means the district might have to dip into its reserve fund -- rather than contribute to it -- to cover its expenses, White said.
"No one could have predicted this," she said. "Now, it's just how are we going to deal with this?"
Board members and district officials agree that they need to ask Beaufort County Council to restore a tax-rate increase -- and the $3 million expected windfall that never panned out -- for next year's budget.
If the board remained at its current millage rate -- about 97 mills instead of 100 mills -- the district would need to continue tapping reserves, according to budget projections. This would lower the fund balance below the desired 15 percent of the district's budget.
While the board and district would look to cut costs where possible, superintendent Jeff Moss said there are required state mandates and staff pay increases that would cause the expenses to grow.
"All we've ever asked is to be whole, and we are not whole right now," board Chairman Bill Evans said. "Part of this has always been a little bit of a guessing game, especially in a reassessment year because we don't know what is going to fall out, but now we need to recoup that."
Moss also thinks the board should consider asking for even more mills for the 2015-16 budget and after.
At Friday's meeting, Moss suggested raising the millage rate another three mills to cover various upcoming expenses -- such as the opening of two new schools in Bluffton and several unfunded state mandates.
The board has two meetings scheduled in April to continue discussing the budget before finalizing things in May. In future meetings, board members will begin to more specifically define their budget priorities and what they should do to make up the shortfall.
"I think this plan with the increase must be considered and starts to prep people that we will need some more mills in the future to make us whole and to cover some of our expenditures and the cuts we will be facing," Evans said.
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- Beaufort County school board turns over unexpected $3 million windfall, September 9, 2013: http://bit.ly/1dVEWzp
- School board extends participation in special Hilton Head tax district, February 18, 2014: http://bit.ly/O6L40K
- Beaufort schools consider whether to continue using lobbying firm for fair funding, January 8, 2014: http://bit.ly/1dVEv8i
- Opening new Bluffton schools might strain budget, district officials warn, January 10, 2014: http://bit.ly/1dVEFwr
- Sen. Davis seeks more money for Beaufort County, January 13, 2014: http://bit.ly/1dVENw2