Sales tax issue, appeal by Vanderbilt, leave hole in Franklin Special School District budget


Sales tax issue, appeal by Vanderbilt, leave hole in Franklin Special School District budget

PHOTO: The Franklin Special School District Board discusses the upcoming 2019 – 20 school year budget at Moore Elementary School Monday. / Photo by Alexander Willis

BY ALEXANDER WILLIS

The School Board for Franklin Special School District (FSSD) convened at Moore Elementary School Monday evening to begin drafting a new budget for the 2019 – 20 school year, during which the board discussed its significant unexpected financial shortfall in 2018 that totaled more than $2,500,000.

Perhaps the most controversial of the losses discussed during the meeting was the loss of revenue from the increased sales tax rate, passed in early 2018.

To summarize, sales tax revenue in Williamson County is split 50/50, with half going towards schools, and the other half going towards the respective municipality where that the tax was generated. The 50 percent split is divided further still, with 92 percent going to Williamson County Schools, and eight percent going toward FSSD.

After county residents voted overwhelmingly in favor of the sales tax increase, with the understanding that a large portion would go toward schools, it was later discovered that FSSD would not receive its eight percent of the newly generated revenue – a hot-button issue for some Franklin residents, that continues to be contested to this day.

The new revenue from the sales tax increase had indeed been counted in the 2018-19 FSSD operating budget, and with the district not receiving that money, will face a loss of approximately $1,000,000.

Another significant loss discussed at the budget meeting was an appeal case by Vanderbilt University Hospital, which took an unexpected turn in 2019. Through the Tennessee State Board of Equalization, Vanderbilt won an appeal to have its properties in Williamson County qualify for the educational exemption for property tax, forcing FSSD to not only lose future property tax revenue from the Vanderbilt holdings, but also pay back years of previously collected property tax. The ruling will now see FSSD pay approximately $900,000 back to Vanderbilt, as well as lose out $50,000 of previously expected revenue annually.

The last of the unexpected budget losses discussed during the meeting was a mold outbreak at Liberty Elementary School that was discovered at the beginning of the 2018 – 19 school year. After recruiting the services of emergency remediation contractors, the total cost of the repairs to FSSD was just over $700,000.

FSSD Associate Director for Finance and Administration Charles Arnold said that while the unexpected events would significantly impact the current school year’s budget, the district may very well meet its needed revenue to adequately fund the 2019 – 20 school year’s budget.

“A bit of good news – as of today, we’re only $470,500 short of meeting our budgeted property tax collections from the year, in spite of the $900,000 loss from Vanderbilt,” Arnold said. “If the last two months collections from this year mirror those from last year, we’ll only be $80,000 short of meeting the property tax budgeted revenues. If our sales tax collections continue at the monthly average for this year, we’ll be $50,000 – $60,000 over our projected budget. So essentially, we may be close to meeting our budget for those major revenue items – that is good news.”

Despite how close the district is to meeting its expected revenue, Arnold said they still may have to pull money from different sources to adequately fund the budget.

“However, our pattern for the last several years has been to over-collect these items, which has helped increase the district’s fund balance – that will not be the case for 2018 – 19,” Arnold said. “In fact, due to the Liberty expenditures, we may well have to use between $750,000 and $1,000,000 in fund balance to close the year. This could not have been anticipated, however, your conservative and prudent financial management in the past allowed FSSD to continue its normal operations this year in spite of these extraordinary events, because we began the year with almost $6,000,000 in fund balance. Hopefully, the robust Williamson County economy will allow us to return to, quote, normal patterns of spending in 2019 and 20, and beyond.”

The board will continue its budget discussions during the second of three budget meetings, which is scheduled for May 20.

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