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HomeMy WebLinkAboutAgenda - 04-30-2007-e Facilitator's Notes - Fair Funding Work Group Tuesday, May 23, 2006 Orange County Schools Central Office, Hillsborough Work Group Members Present: Jamezetta Bedford, Randy Copeland, Valerie Foushee, Alice Gordon, Jean Hamilton, Libbie Hough, Michael Kelley, Dennis Whitling. StaffPresent: Shirley Carraway, John Link, Neil Pedersen, Andy Sachs (facilitator), Rod Visser Convening Randy Copeland, Chair of the Orange County Schools (OCS). Board of Education welcomed the group to the county district's central offices. He said that his Board has been looking forward to today's conversation; and that he was hoping to raise some' questions and clarify some issues that are of interest to his Board. He said that he was open to hearing the ideas of the members of the Chapel Hill Carrboro City Schools (CHCCS) Board of Education, and reiterated his welcome to all of the attendees. Jamezetta Bedford, Vice Chair of the CHCCS Board of Education, introduced herself and fellow CHCCS Board of Education members Jean Hamilton and Michael Kelley, and said that they were all glad to be present. Alice Gordon, Board of Orange County Commissioners (BOCC), said that she was looking forward to the meeting and hoping that the group would be able to develop a shazed vision, a shared data base, and address the three elected Boards' shared challenges together. Andy Sachs, who had been asked by BOCC to serve as facilitator for the group, presented the proposed meeting plan. Mr. Whitling asked how the meeting plan had been developed. Commissioner Gordon explained that she had reviewed, revised, and ultimately approved a draft that Mr: Sachs had developed based on a conference call with .Commissioner Gordon and Mr. Visser. Commissioner Gordon explained that BOCC wanted the group to have one or two meetings to see if the group could come up with solutions for the coming budget year. Since it is akeady budget season, BOCC is not interested in gathering a lot of new information. However, BOCC is going to have to fiend an operating budget and a capital budget. "We will have to do something." In the past, we've had meetings with the school boazds, but it's always been rushed and the opportunity for meaningful input from the school boards has been relatively limited. This is a particularly challenging budget yeaz, and we've been talking about fair funding for a long time. At the last joint session with the three Boards, Commissioner Gordon said, I raised the possibility that we should try to get this group together to try to develop some short-term solutions. Mr. Whitling asked if BOCC would be bound to the recommendations developed by the work group. Commissioner Gordon said that the Board would consider this group's recommendations seriously, but looked to this group to be advisory. Ms. Hough suggested that the group not review all of the data that had been distributed by County staff in support of the meeting. She suggested that the data be referenced as needed while the group talked. Everyone agreed. Dr. Pedersen asked what the staffs' role would be during the meeting. Mr. Link said that he could share facts anal history. Commissioner Gordon suggested that staffparticipate as resource persons. Through fur(her discussion, the group agreed that staff would provide information to the group, as needed, either in direct response to questions or where ever staff thinks the group would benefit from the input. Staff will not be part of work group decision-making. Mr. Visser clarified that the proposed ground rule stating that "the work group will rely upon data that is readily available..." is needed because County staff is devoting all of its time to development of the County budget, and is therefore without additional time for generating new analysis. In response to the proposed ground rule that work group decisions be made by iman~mous consent, Ms. Bedford suggested that the group communicate ideas to BOGC that had support from almost everyone in the group, and when doing so that the minority opinion be conveyed as well. The group agreed. Mr. Whitling asked how group members could present new information to the group. In response to a question from Michael Kelley, he explained that he has historical data on funding produced by OCS staff that might supplement what County staff has distributed. Commissioner Gordon suggested that group members share any new information at relevant times during the group's discussions. Background Data County staff supplemented the packet of background information with a handout titled, "Impact Fee Legislation and Implementation. " Ms. Bedford called attention to the chart titled, "$1 Per Pupil Equivalent.." She expressed concern that the dollar increments on the chart stop at $2,976, which is not even as high as OCS's requested budget for the coming year. Perhaps the increments should be larger, she suggested, so that there is space to incorporate OCS's requested per pupil amount ($3,542) into the body of the chart. Otherwise, she said, "It puts in the Commissioners' minds not to fund their budget." Second, she said, the chart implies that CHCCS wants all of its per pupil increase to be funded through the chstrict tax, "and that is not what we want represented at all." The 2 format of the chart might not allow for that point to be made, she said, but it is very important that this point be noted in the record. Mr. Visser said that pages could be added so that the $1 increments can run all the way up to the OCS amount. ~He said that he understood Ms. Bedford's second point but needed "to think a little more about" whether it.can be incorporated into the chart. Mr. Whitling called attention to the chart titled, "2006-07 Student Enrollment Projections. " He said that this yeaz OCS is losing a disproportionate share of its per pupil fiinding to charter schools. The growth in charter school enrollment this year was 82 students, he said, and the effect on OCS is about $500,000. He added that if OCS had not lost those students to the charter schools, then the county district would have received funding from the state for a proportional number of staffpositions. This is why OCS has a line item in its requested budget for "increase in charter students," he said. Dr. Kelley said that local funding for charter school students "should be a wash" because they do not place demands on either district's resources. For example, a shift of 82 students from a school district to the charter schools represents about three teachers that the district no longer has to pay for, he said. Fewer students means less funding, and whileT see why that would be problematic, Mr. Kelly said, we can't get funding for students that we're not serving. Ms. Hough noted that there are fixed costs that do not diminish when student enrollment declines. We don't need to recoup the full $500,000 that we're losing from the growth in charter enrollment, she said, but we would, be remiss if we did not acknowledge that this was a significant hit for us this year. Dr. Kelley said that CHCCS was in a similaz situation last year, and that he understands ,the impact of such, losses on a district's economies of scale. `But that's the reality we all have to live with" he said. When enrollment declines we have to figure out how to scale down the fixed costs. Dr. Pedersen said that as a school district's projected charter enrollment rises, the County's calculation for the district's total projected student enrollment also rises. Charter student enrollment is included in the district's overall enrollment numbers, he said, and both districts get the same amount of local per pupil dollars against those overall numbers. There is not a loss of local dollars when numbers go up for charter students, he said. Mr. Whitling clarified that the $500,000 loss he had referred to was based on a comparison of GHCCS's proportion ofchazter students to OCS's proportion of charter students. If OCS had the same proportion of students going to charter schools as CHCCS, then OCS would have only 73 charter school students, not 254. The additional 181 charter school students (at the rate of $2,796 per pupil) represents a half million dollars "of flexibility" that OCS would control if it did not have to pass through to the charter schools funding to support such a disproportionate number of its total enrollment. 3 Mr. Whitling added. that he did not mean for this to be a major point of discussion for this group, but he did want to raise it because it had come up during OCS Board discussions. It was on the budget work sheet that the County had provided, and since neither OCS nor CHCCS had charter school enrollment increases over the past several years, "we never had to deal with it before." Dr. Caraway added. that this unprecedented and disproportionate charter school enrollment is significant at least because it increases the amount of the funding increase that OCS is requesting. It is important that everyone understand why OCS is requesting that much more money, she said. It is money that OCS is asking for but would not be able to use for OCS programs. Dr. Kelley suggested that instead of focusing attention on the district's increase in charter school enrollment, OCS emphasize that its students have needs that are not going to be met if the County does not meet the district's full budget request. lVir. Whitling, calling attention to the handout titled, "County's Annual Debt Service Projections," noted the gap between the County's debt ceiling and the projected debt service for 2009-10. He asked if the projected gap would be as large if the County had made a different decision.in 1996 on the Cedaz Ridge High School construction debt. Mr: Visser said that he could not answer Mr. Whitling's question without a lot more research, and that the policy adopted by the Commissioners. a yeaz ago takes reconsideration of that decision "out of play." He explained to the group that the County and school boards in 1996 had structured an arrangement to use OCS "pay as you go" funds for half of the original construction costs for Cedar ~dague ugh S was in pazt t than fund those costs through debt service. The purpose of th g facilitate the passage of the 1997 bond referendum. In return, OCS was to receive future funding for capital needs. However, Mr. Whitling added, interest rates declined unexpectedly, the savings that the County had anticipated from the arrangement did not materialize, and -- although OCS appreciates the decision in the. short term -the county district did not received the anticipated. longer term benefit. Ms. Hough said that the "County's Annual Debt Service Projections" handout raises a question about the relationship between the County's capital debt ceiling and the ability of the County to meet the schools' operating budget requests.. We aze now so close to the County's debt ceiling, she noted, and we're using taxes to pay off debt more aggressively. Is this the reason why the County would not raise both the ad valorem anal district taxes in order to meet the schools' needs for operating funds, she asked? Dr. Kelley said that this was "an excellent question," and restated it for Mr. Visser: is there any financial reason why the ad valorem tax cannot be raised? Mr. Visser said the County is not allowed to have a tax rate that exceeds $1.50, but "at the funding levels we're talking about here, we're not approaching that statutory limit " Mr. Link added that only one county in the state (Scotland County) has a tax rate above 4 $ 1. He said that in the coming budget year it would require a three cent increase in the tax rate to pay debt service, three cents to completely food the schools' increased operating expenses, and three cents for recommended increases in the the County's operating budget. It might be easy for some to say that we should raise taxes by nine or ten or twelve cents per year, he said, but when the tax rate is akeady at $ .84, then it takes only three years of those kinds of tax increases for the rate to get up to $1. Our tax base 'is increasing at only 2% per year, he said, and it's simple mathematics to see that taxes should not increase annually by 20%. "Political will" is not the only limit on the increase in taxes, he said. It also is prudent financial planning. Any county that gets its tax rate up to $1.10 is going to have the state Local Government Commission reviewing "everything that they're doing." You'd have folks ~in Raleigh asking lots of questions if you went over $1, he said. Dr. Pedersen recalled the group's attention to the handout titled, "County's Annual Debt Service Projections," and asked which of the four bars within each of the fiscal years should be used to identify the most relevant difference between debt ceiling and anticipated debt. Mr. Visser said that the 1/20/06 bar (farthest to the right) should be used for that purpose. However, Commissioner Gordon said that the 1/20/06 bar reflects a staff recommendation only. She asked that the record of this meeting note the-need for the Commissioners to adopt into policy a Bond and Alternative Issuance Plan. Mr. Copeland noted that beyond "political will" is the actual ability of people to pay .more in taxes. Our districts are composed of two different sets of people, he said, and we need to appreciate how much the city's district tax affects OCS. When we talk about raising the ad valorem tax and raising the district tax, he said, we're talking about raising taxes on people who aze on retirement incomes. As farmers, they are living off of what they put in the bank. They don't have 401-K's or retirement accounts from working at the university, he said. The other counties azound us aze not raising taxes; Alamance County's tax rate is around $ .56, he said. We need to ask what it is that the people in Orange County aze getting in return for paying $ .84. At some point,lVlr. Copeland added, the Commissioners need to relax the rules on development in our county. He also called the group's attention to the handout titled, "One Cent of Property Tax Equivalent," and compared the revenue that would be generated from a penny increase in the ad valorem tax ($1.2 million) to the amount that would be generated from a penny increase in the district tax ($763,338). "If OCS had a district tax, it would only bring in around $400,000," he said. Dr. Hamilton asked 1Vlr. Visser to explain the County's debt ceiling. Mr. Visser explained that 10 years ago the BOCC imposed a debt management policy on itself. The policy capped the County's annual debt service expenditures at no more than 15% of the County's annual general fund expenditures. 1VIr. Link asked the group to note that the Commissioners are working hard to achieve economic development in appropriate areas within the County. He added that 40% of the tax base outside of the County's three municipalities is in "use value, "which allows the 5 owner of agricultural property under certain circumstances to pay property tax at approximately 10% of what would be owed if the land were not in agriculture. Use value supports local agriculture, he said, but it limits the amount of revenue that is available for County services. Mr. Copeland added that while the intent of use value is to support lazger farms, there are a number of people with relatively small acreage farms (10-15 acres) who are taking advantage of the exemption. Mr. Copeland added that the County has purchased a lot of land for greenways, pazks, a reservoir, etc. which, if it were in private ownership -even if were taxed at use value rates -- would generate more revenue for education. I recognize the need to preserve. land, he said, but at some point we-need to ask how these public land purchases are affecting both of our school districts. Dr. Kelley noted that the overwhelming source of funding for local public education comes from the property tax. This places a burden on property owners in both school districts, he said. He asked group members to understand that "every retiree in the city schools district does not have a 401K," and there are a number of people in the city district who aze very stretched financially. High taxes can lead to people being displaced, Dr. Kelley noted. "Some people who have lived here their whole lives can no longer pay their taxes, and they have to leave. There aze a number of impacts from raising property taxes that we all have to~realize." To me, he said, it comes back to either raising the property tax or reallocating the distribution of tax revenue between schools and non- school expenditures: There is no other source of revenue for schools other than property tax that is appazent to me. Fair Funding Solutions . Commissioner Gordon, noting that it was 4:05, said that she wanted to hear more from group members about solutions. Group members took turns putting forth ideas, as follows. Mr. Whitling noted that while OCS is not expected to need new schools over the next ten years, CHCCS will need approximately $120 million for. new facilities. He expressed concern that the County's debt service over the next 3-7 years in support of capital needs is going to "drive out" operating funds, so that the schools "will never" get what they need for operations. "We'll never get ahead of the curve," he said. Ms. Hough said that she shazed Mr. Whitling's concern. "My taxes will continue to go up three cents a year to pay for the debt service on Chapel Hill schools," she said, "which impacts operational funding for both school systems." Ms. Hough also expressed concern about the CHCCS district tax being 30% of the city district's local funding. She acknowledged that the city district does not want to fund its entire operating budget increase through the district tax and that the BOCC "would never zero out their commitment to operational funding for OCS." However, she said, "under a worst case scenario," CHCCS could rely entirely on the district tax to expand its operating budget and a.s a result the Commissioners would not have to provide additional operating funds to OCS. "If nothing else," she said, this scenario provides "the direct 6. link" between the two districts' budget requests. I have no problem with people choosing to tax themselves, she said, but for me the problem is the size of the district tax relative to the overall shaze of local funding. "If we don't have the option of raising the ad valorem tax and reducing the district tax then I don't know what other solution exists." Mr. Kelly said that the district tax has "no effect" on the County's debt ceiling. He said that if the district tax were eliminated, "two thirds of the County's population would come screaming to the Board" demanding that the ad valorem tax be raised to replace those funds for education. As a result, the People living outside of the city school district would "have no say in what that tax level is: ' In my opinion, he said, it would be wrong to eliminate the right of the people living outside of the city district to determine their own tax level. Instead, he said, the approach to fair funding should be to connect both of the school boazds more tightly with their respective constituents: either tighten the connection officially, by giving each of the school boards taxation authority, or tighten the connection unofficially, through a commitment by the BOCC for "pass through budgeting." Ms. Bedford said that she would like to see per pupil funding in both distracts increased consistent with how the respective school boards have defined their own needs, and to do this through a rise in the ad valorem tax. If the ad valorem tax rises sufficient to enable reduction of the district tax, she said, then it would appropriate to reduce the district tax. "Perhaps it is time for the [4$%] target for education to be increased," she added. This county values education -along with other things -- and the target is holding both of the school districts back. She suggested that the BOCC investigate the impact of adding two cents to the ad valorem tax, dedicated for schools. Ms. Bedford also said that she is concerned about higher taxes causing displacement of long-term residents from both districts. She wondered whether senior, disabled, or limited-income residents of over twenty years or so could be assessed lower property tax rates, and suggested that the BOCC investigate this fiu~fher. Dr. Hamilton said she would like each school district to get what it needs, and distinguished "fulfillment of needs" from two other ways of defining fairness: equality and equity ("you get what you pay for"). She acknowledged that equity also plays an appropriate role within each district, for example, she said, it is fair [i.e., equitable] for the constituents of a school district to get the sort of public education for which they aze willing to tax themselves. In order to be fair to both districts [i.e., fulfill the needs of both districts], she said, there must be more funding for both. If ad valorem taxes are not raised enough to fulfill the needs of both districts, then it is fair [i.e., need fulfilling] for the city school district to supplement the County allocation with funds from its district tax, especially since this would not constrain OCS from getting what it needs. On the other hand, she said, if ad valorem taxes were raised to levels that would provide the city district with more operational funds than it needs, then it would be appropriate to lower the district tax. 7 Mr. Whitley said that he agreed with the ideas Ms. Bedford had put forth eazlier. He said that he would support a "slow increase" in ad valorem taxes dedicated to education (such as two cents per yeaz), property tax reform to protect long time residents against displacement (although it would require state legislation, he said), and a raise of the approximately 48% tazget. He said that without a raise in the 48% target, OCS operating budget increases always will be limited to the 1%-2% growth in property tax values during non-revaluation years. Mr. Whitling added that another idea worth exploring, which also would require legislative action, is an increase in the excise tax on real estate sales. There aze many real estate transactions in this County every year, he said, anal most people aze not thinking very much about it when they pay the tax because they do not actually write a check specifically for it. The tax is wrapped up with all of the other closing arrangements. Ms. Hough said that she is in favor of a gradual increase in the ad valorem tax, and "could live with" a two cent raise dedicated to schools. She said that she agreed with Dr. Hamilton on the importance of fu]filling the school districts' needs, and emphasized that she is not advocating for "zeroing out" the district tax (although, she said, once the ad valorem gets high enough such thatthe district tax is no longer needed then "it would be fine" if the CHCCS Board made it's own decision to phase it out). Ms. Hough said that the Grumet Report "has cleazly outlined that our children's needs are not being met." We've got the information we need, she said, but the Report does not. appear to be informing the County's budget process. She asked how the Report is being used by BOCC to identify priorities in the education budget. Ms. Hough also expressed appreciation for Commissioner Gordan's updating the group on impact fees, and said that impact fees might contribute to meeting the schools' capital needs. "I'm not opposed to that," she said. She also said that it would be worth looking at the use value system. Ms. Hough acknowledged that she values the land preservation goals that might be advanced by the use value, but noted that there may be a significant cost to education from it, especially for OCS. Mr. Visser warned group members that the use value system is very complicated. He said that there is no legislation that simply allows an agricultural landowner to pay 6% or 10% of their property tax. Commissioner Foushee noted that there are children with unmet needs in the city school district. This is not often acknowledged, she said, and she asked that the meeting record reflect this perspective. The local funding going to the city schools district is not sufficient to meet the needs of all the CHCCS students, she said. 8 In response,. Mr. Copeland wondered how much more funding the city district needs and how efforts to find sufficient funding for the city district's students would affect OCS's ability to meet its student's needs. Mr. Copeland also said that displacement of long time county residents, as a result of high taxes, is a real problem. "It's wrong to say that if you can't afford to live in the county then just move out." Mr. Kelly agreed, and, said that a lot of city district teachers cannot afford to live in the county. Mr. Copeland said that his son, a Canrboro fire fighter, can't afford to live in the city school district or in the county. Lf this is a shared concern across the two school districts, Mr. Copeland said, then we need to acknowledge it and respond with sensitivity to our longtime residents. Mr. Copeland said that BOCC has never defined "fairness." OCS is doing all that it can do. Eventually, .the Commissioners have to ask themselves if they really think they are providing us with a fair amount of funding for educating our children... If the answer is yes, then we need to move on. But if the answer is no, then I'm not sure where the . dollars are going to came from but if the Commissioners think they aze being unfair to us then at some point it is the Commissioner's job to fix that. We can identify programs that we all want funded, and on things that we can work on together, but at some point the Commissioners have to identify the district tax as "the elephant in the room," he said. Commissioner Gordon said that the work group's charge is to generate ideas that the . Commissioners might use in the coming budget cycle to move toward fairness. For example, if the answer on the operating side is to raise the ad. valorem and decrease the district tax in a way that would meet the needs of both school systems, then the next discussions would be "by how much" and "would the two school boazds advocate for the solution." On the capital side, she said, the group might explore what to do given that the city district has $120 million worth of needs over the next ten years while the county district doesn't have a need far new schools. What should be in our ten-year capital improvement program? She said that she is looking for "the best thinking we can come up with," because in the end the BOCC is going to do something. We're going to pass an operating budget for next year, and we will pass a capital budget, she said. I'm trying to find out what your thinking is about the big issues, she said, but the big issues don'f seem to have changed: OCS needs more operating money. CHCCS has a district tax that allows them to have a certain amount of money. I can't, think of any other way to get you more money, except by raising the ad valorem, she said. We have been repeatedly unsuccessful in getting authority for levying the real estate transfer tax, she added. On the capital side, we have $12.8 million budgeted for the next CHCCS school, but after the standazds are decided upon I can bet you the cost will be at least $20 million, she said. This gets us up against our debt ceiling. 9 Both districts are worried about how the capital program. is going to affect their operating budgets; she said. These aze enormous challenges. If you can come up with something then that would be enormously helpful.. If not, then we will do our jobs. In response to a question from Commissioner Gordon, Mr. Whitling clarified that the proposal to raise the ad valorem tax by two cents involves an annual increase for an unspecific amount of time. The two cents would be dedicated to education, on top of the three cents to be recommended this yeaz by the Manager, Ms. Bedford added. The increase would be two cents the first year, four cents the second year, six cents the third year, said Mr. Whitling. Perhaps after the third year we would see if the funding levels are adequate. Commissioner Gordon said that the details of the. proposal need to be developed further so that everyone can understand it. In response to a question from Mr. Link, Mr. Whitling explained that it would not be necessary to raise the ad valorem tax by two cents for OCS and then another 2.6-cents for CHCCS. The proposal is to raise the tax by two cents per yeaz to generate funds. for both districts. Last year, for example, the two cents would have gotten OCS $931,000, he said, and CHCCS $1.4 million. Last yeaz, if the Commissioners would have raised the ad valorem by two cents, Mr. Whitling added, the district tax could have been. lowered instead of raised. Mr. Link questioned whether CHCCS would ga along with any plan that would reduce the district tax while the city district's requested budget increase is not fully funded by the ad valorem. Ms. Bedford said that if the city district's budget request were not met through a raise in the ad valorem, the city schools would want to retain the option of meeting its own needs with its district tax. Mr. Link then said "what we should~be talking about" is a nine-cent raise in ad valorem taxes. This year the Manager is recommending athree-cent increase, which covers only the 8% rise in teacher's salaries. If the Commissioners now have, say, seven cents total in the Manager's recommended budget for increasing the County budget -- including the Mana.ger's three cents foreducation -- and they went up by another two cents per the proposal under discussion in this group today, then the impact on ad valorem taxes would be nine cents. Mr. Link continued trying to clarify the proposal. The two cents would be divided on a per pupil basis between the two districts, he said. And what is the "give and take" in this scenario? Would the city district be willing to reduce the district tax in the first yeaz, he asked. Maybe you don't require them fo reduce the district tax in the first year, he said. Maybe you hold them harmless the first year, and then work out in the subsequent three years how you go about reducing the district tax. Mr. Link noted that those who now are paying .84 per $100 would pay .93 if the ad valorem tax were raised by nine cents. "How would you sell that to the public," he asked? In subsequent years, revaluation might provide some relief, but that's. still an increase of two cents per year every year. Commissioner Gordon added that the numbers 10 on the capital side "are tremendous." The County is either going to pay for the needed expanded school capacity -another seven million dollars for the next elementary school, for example - or, under SAPFO, developers are not going to be allowed to build until the school is available. Mr. Link said that he was not taking a stance on the two-cent proposal, but he urged the group to note that under the proposal those who live in the OCS are going to pay a lot more in taxes. "It's simple math and there is no way around it," he said. Dr. Kelley said that group members were "pretty close on the major points:' Impact fees need to be reviewed, and it is good that the Commissioners are doing that, he said. The real estate transfer tax is a great idea. And it really comes down to selling the community on raising the ad valorem tax. My impression is that the majority of the people in the city district support fully funding the city schools, he said. To the extent that raising ad valorem tax will over-fund the city district, we could reduce the district tax. There is an almost proportionality of the tax base and students across the two districts, Dr. Kelley added. The situation is not equal, and I now understand why a district tax in the County would not be a good solution, he said. Ms. Bedford noted that a nine cent increase in the ad valorem tax can be sold by explaining that the state board of education has passed new rules regarding testing. Kids who do not pass end of year exams will not graduate. And the economy has changed: There are no jobs for kids without a diploma. With our current funding -even as we move funds to address the needs of minority students, students taking English as a Second Language, and special ed. students - we need more dollars. Although we aze closing the performance gap at the elementary level, and each district has different needs, we still have a lot of work to do at the middle and high school levels that requires time and funding. Education is the key, she said, for farmers' children and for the children living within the city district. I don't think its fair that military service is the only option for people who want a ticket out of poverty. We need education, and I don't think it will be hard to sell the increase. Dr. Hamilton agreed that it would not be hard to sell an increase in the ad valorem tax. City district residents value education, she said. We can meet both school districts' needs this way, without having to eliminate the district tax. Next 1Vleeting Mr. Copeland asked Commissioners Foushee and Gordon if they were getting what they needed from today's discussions, and if a second work group meeting were needed. Commissioner Foushee~ said that the next round of discussions should focus on solutions, and not be bogged down by the different positions across the two school districts with respect to the district tax. She is also curious to know what each district thinks about the Manager's proposal for funcling lazge ticket operational items outside of the per pupil funding stream. 11 Commissioner Gordon agreed that the group should move, forward toward solutions. She saidthat it might be worthwhile to explore options in the event. that an increase in ad valorem funding does not provide full funding for the city district's requested operating budget. She asked if there were alternative mechanisms, other than the district tax, to make up the diffe7ence. She also said that we need an approach to funding new schools in the city district, and it might be useful to explore alternatives to bond funding to fund those capital needs. The group set its next meeting: Tuesday, June 6, 3:00 PM - 5:00 PM at the Southern `Human Services Center.. 12 ~~~ `~ ~ ~~ Recommendations of the Fair Funding Work Group to the Board of County Commissioners June 8, 2006 . Work Group Members: Jamezetta Bedford, Randy Copeland, Valerie Foushee, Alice Gordon, Jean Hamilton, Libbie Hough, Michael Kelley, Dennis Whitling. Introduction The Fair Funding Work Group met twice (5/23/06 and 6/6/06) in response to the Board of County Commissioners' request that representatives of the two school boards and BOCC work together at generating solutions to concerns about fair funding for the two school districts in the County's 2006-2007 operating and capital budgets. The following has unanimous consent among all members of the Work Group: 1. Capital 1. Use the $2.4 million of anticipated lottery proceeds to provide an additional funding stream for school capital projects. These funds should not supplant current funding sources. 2. Include new school start-up costs for equipment and technology in the projected capital budgets for new schools and fund along with the construction costs. 3. Review the level at which impact fees are assessed and adjust them in light of increased construction costs 4..Allocate impact fees directly to the school districts, outside of the 60/40 formula, to be used for "pay as you go funding" for school construction. 11. Operating 5. The Work Group supports the "reserve fund" of $800,000 recommended by the County Manager, but with the funding considered over and above the 48.1 % target: This reserve funding could be used for services and programs such as (but not limited to) middle college, transportation of students between districts, other collaborative initiatives, and health and safety positions. The outcome should at least maintain the current levels of any services in either district. 6. Add one cent. (1 ¢) to the general ad valorem tax to provide additional funding for the school districts in budget year 2006-2007. This one-cent increase should be treated as additional funding over and above the 48.1 %target. 7. Commit to an additional one cent increase to the general ad valorem tax over and above the previous year's increase to provide supplemental funding to the school districts for 2007-2008 and 2008-2009, with these increases to be treated as additional funding over and above the 48.1 % target (e.g., the total increase in the general ad valorem tax would be 2 cents for 2007-2008 and 3 cents for 2008-2009). Re-evaluate the impact on fair funding at the end of this three year period. ~-1T~`QC:~l1/1~ ~ t=-~ Created 4/72/07 Fair Funding for Schools Goal Statement -Collaborate with the Chapel Hill Carrboro City Schools and Orange County Schools Boards of Education to identify ways to address fair funding for schools. Objectives 1. Define what funding components (current expense, capital, fair funding,. debt and debt service) should be considered in the fair funding equation. 2. Consider the following June 8, 2006 recommendations from the Fair Funding Work Group wit~~ r~ rd tQ_fundi~g sch~nl~capi~ilneec~~~ a. U e lotte roceed to rov e n addi nal fun ng stream for s h c p tal p of ct . he a un ho not supplant rr n fu ins ur e . b. I cl d o s ho st rt s s ui t and technology t e pr ctc~, c it I budg fo news o Is and fund along c. ie~`thveF~t9'ch lees arsessed and adjust them in light of increased construction costs. d. Allocate impact fees directly to the school districts, outside of the 60/40 formula, to be used for pay-as-you-go funding" for school construction. 3. Consider the following June 8, 2006 recommendations from the Fair Funding Work Group with regard to funding school operating needs: a. Consider the Board approved $800,000 allocation for human services and safety initiatives in fiscal year 2006-07 over and above the 48.1 percent target. b. Allow usage of the $800,000 allocation for services and programs such as (but not .limited to) middle college, transportation of students between districts, other collaborative initiatives, and health and safety positions. The outcome should at least maintain the current levels of any services in either district. c. Add one cent to the general ad valorem tax to provide additional funding for the school districts in budget year 2006-07. This one-cent increase should be treated as additional funding over and above the 48.1 percent target. d. Commit to an additional one cent increase to the general ad valorem tax over and above the previous year's increase to provide supplemental funding to the school districts for fiscal years 2007-08 and 2008-09, with these increases to be treated 2 4 5. as additional funding over and above the 48.1 percent target (e.g., the total increase in the general ad valorem tax would be 2 cents for 2007-08 and 3 cents for 2008-09). Re-evaluate the impact on fair funding at the end of this three-year period. Using the present partnership between Orange County Department of Social Services and Orange County Schools as a model, work with both districts to determine if there are other opportunities to collaborate and maximize funding in the areas of school social work and public safety. a. Video surveillance cameras grant b. School social workers Explore future options for funding outside of the per pupil allocation. D°d L