School board approves 20 year plan for mill levy fund spending

Inflationary reserve to extend life of mill levy

Guiding principles for the use of mill levy tax funds passed by voters last November were approved by the Gunnison school board Monday night, along with recommended allocations and expenditures for the current school year.

Together with superintendent Doug Tredway and district business manager Stephanie Juneau, the ‘Fund 26’ review committee that oversees the cash drafted an initial report to the board of education, detailing its methods to ensure that the mill levy override funds be used responsibly and transparently. Through this plan, money from Fund 26 should sustain core programs for 20 years.
“I’m really proud of them for supporting a very long-term, sustainable approach to the monies that the voters approved,” Juneau said.
Funds from the 2004 mill levy override supported the district for a decade, but this time around the oversight committee plans to make the money last twice as long. In response to the inevitable decrease in spending power of the $2.5 million approved by voters, the committee plans to set aside a certain amount of funds each year for the first 10 years to offset inflation.
This year, the money allocated toward the inflationary reserve amounts to $555,185, or approximately 22 percent of the 2014-2015 Fund 26 budget.
In making this recommendation, Fund 26 review committee chairperson Ian Billick wished to address future cost-of-living increases.
“The mill levy measure sets an absolute amount that does not increase year after year, so over time, the true value of what is available will erode because of cost-of-living,” Billick explained. “I didn’t want to see the district take an approach that allowed them to fund a bunch of things in year one and then immediately start cutting into year two.”
After careful deliberation, the committee settled on reserving $1.9 million per year for program spending, with an extra 2.5 percent tacked on each consecutive year for inflation. This plan should allow the district to supplement the inflationary reserve for the next 10 years, while still having enough money to support core programs. Then, in 2025, funds will begin to withdraw from the inflationary reserve, which should sustain the district for another 10 years.
“The idea was to use less of it upfront, so collect the money and not spend it, allow that reserve to go up, and then once the cost-of-living has grown to a point where $2.5 million is inadequate to cover those core programs, we could use that reserve to cover it,” Billick explained.
All of these plans are contingent upon the state’s $1.9 million negative factor, which may or may not decrease in upcoming years. The negative factor is the amount of money the state withholds from school districts based on what is expected under some state regulations. In the absence of funding changes at the state level, the district should be able to operate without cutting programs or returning to the voters for two decades. However, if the state decreases the negative factor, the committee will alter the mill levy accordingly.
“If the state were to provide more funding than anticipated, we could reduce the mill levy, so that would reduce the burden on taxpayers,” Billick said.
In relation with the state’s negative factor, the committee instituted a spending baseline of $1.9 million, which would also decrease if the state were to increase funding.
The board was additionally presented with the committee’s recommendations for the current school year’s preliminary allocations and expenditures from Fund 26. The majority of the money, $630,000, was allocated toward capital investments, such as building maintenance, safe schools infrastructure, technology and transportation.
Juneau explained that in future years allocations will look much different. This year presented a unique scenario, as the funding will be put toward only one semester’s worth of expenditures, instead of two.
“This is only for the first shortened year,” Juneau said. “The district has some specific needs in capital that can be spent wisely in a six-month period of time, whereas in the 2015-2016 school year, that allocation will look a lot different. There will be a lot more spent on staffing, and there will be a reduction in capital investments.”
Other areas of funding allocations for the 2014-2015 school year include programming, staffing, and future purchases. A portion of the Fund 26 money will also be reserved for the Marble Charter School, and for the inflationary reserve.
After presenting the committee’s guiding principles and recommendations, Juneau asked the board to certify the mills. Based upon the combined total of both the general and bond redemption fund, Juneau requested that the board certify 32.173 mills for the 2014-2015 school year.
Juneau noted that this fall’s bond refinance saved taxpayers between $5 and $48 per year, depending on a property’s assessed value.
“The bond refinance that took place this fall allowed the bond redemption mill levy to be .5 less than the previous year,” Juneau explained. “Therefore, the total mill levy assessed for property tax year 2014 to be collected in 2015 is 32.713. This is only 4.746 more than in the previous year, which includes funding the $2.5 million mill levy override that voters authorized on November 4.”
The motion to certify the mills carried unanimously. Specific amounts for each Fund 26 allocation and expenditure will be presented by Juneau during the January 26 school board meeting.