The Putnam County Commissioners Budget Committee will recommend a change to its funding mechanism for the school system, reverting back to a percentage of the sales tax instead of the current flat rate.
The committee made the decision Thursday night after a presentation from Putnam County Director of Schools Corby King. King said the change this year could increase funding by some $2 million.
“We have no growth mechanism for funds unless we come back to [the Commission],” King said. If we get a percent back on the sales tax, we have a natural way to grow as costs go up. Costs for every department go up, and this would give us that opportunity.”
The school system would get 50 percent of the sales tax revenue in the county. The two sides agreed to move to a flat sales tax rate during the 2008 economic downturn.
The School Board approved a second draft of this year’s budget Thursday night. The revenue gap dropped to $4.82 million. Putnam Schools Chief Financial Officer Mark McReynolds said the system may need to close the gap through more budget cuts and money from the fund balance.
Commissioner Darren Wilson asked how low of a fund balance the school board is comfortable having. McReynolds said the school legally has to have 3 percent of operating costs in the fund balance, but would be much more comfortable at 12 percent.
“Some of the problem in coming up with this comfortableness is sometimes, things like the Frontier building we just purchased that came avaliable, we had to pay that out of the fund balance,” McReynolds said.
McReynolds said he is comfortable at the current fund balance of some $17 million, but he would be uncomfortable if it dropped to $15 million.
Commissioner Vinnie Faccinto said he favors using the fund balance, since the schools would still be above 12 percent of operating costs if they covered the remaining gap.
“We don’t want to over save when we’re having to ask our taxpayers for more money,” Faccinto said. “I think we should get as lean as possible until we don’t have any alternatives, then we can ask for more.”
McReynolds said he expects more budget decisions will be made before the district touches the fund balance. Last year, some $1.7 million was taken from the fund balance to close the gap.
Commissioner Chris Cassetty moved to send the proposal before the entire County Commission. The motion was approved unanimously.
