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City School Budget Crisis Could Soon Mean Big Payout for Taxpayers

A looming budget crisis could soon be hitting city taxpayers where it hurts.
According to multiple sources, the Columbus Municipal School District is anywhere from half a million to nearly two million dollars over their allotted budget for the 2011 fiscal year. The fiscal year ended on June 30, and the school has been operating without a budget ever since. Mississippi law dictates that the all districts have a budget in place by August 15. Theoretically, the district cannot issue annual contracts without a budget; without contracts, teachers can’t get paid.
The school district’s FY11 budget (Federal, state and local funding) showed $51,875,388 in expenses and $44,560,224 in revenue. If County Tax Assessor Greg Andrews were to receive 100% of due taxes, CMSD would receive $13,097,760 in ad valorem tax money. The actual school budget request for FY11 was $13,548,000 with a homestead exemption loss of $124,000. Their actual request including homestead loss would be 13,672,00. Yet the school district is asking for more. According to Andrews, the school district claims they need a minimum of an additional $600,000 from the city. To get that amount, they are asking the city for an increase in millage, or, simply put, more money. An increase in millage would mean a tax increase for city taxpayers.
While millage is a term frequently used by elected officials and most taxpayers are familiar with the word, the actual definition can get lost in translation. Each year, Andrews sets the value of a mill for the city and the county. A mill is equivalent to one dollar out of every thousand. At the end of each year, city and county taxpayers see a millage rate on their tax forms. That rate is in part set by the city and the school district. The formula for that is as follows: The budget requested by the school is divided by what Andrews claims a mill is worth. That amounts then equals what a mill should be.
If the city schools’ ad valorem tax request of $13,672,000 is divided by last year’s value for a mill, $208,000, that would set the millage rate at 65.73 not 62.97.
However, the value of a mill is declining while the millage rate is staying the same.
In 2009 the value of a mill was set at $215,000. In 2010, the value decreased to $208,000. In 2011, the value of a mill decreased yet again with a value of $205,000. During those three years,  CMSD maintained a millage rate of 62.97 and consistently came up short on funds every single year. With a $7,000 difference in mills from year 2009 to 2010 and by not adjusting their millage rate, the school district was already starting by being in a shortfall of $440,790. With a $3,000 difference in mill value from 2010 to 2011, the district fell an additional $188,910 under budget. Yet they still requested the same mill rate for all three years. David Armstrong, the city’s chief operations officer, is the one who meets with school board members and requests the value of a mill. He declined to comment.
Andrews says he sent two letters to the school board in November and one in May warning them of the inevitable shortfall. According to the letters, Andrews urged the board to resolve the financial problem “so we won’t have this issue in June.”
According to sources who are involved with the looming crisis, city officials have reached out to the school board for weeks in hopes of resolving the issue. Only this past Monday did board members agree to a meeting, but reportedly did not wish to meet with all city council members; according to state law, if a majority of the city council members are present at any type of meeting, it is considered a quorum and the media must be made aware. In the case of the Columbus City Council, that would mean four out of the six council members would have to be present to qualify as a quorum. At Monday’s secret meeting, Mayor Smith, along with Councilmen Mickens, Box and Gavin, met with a few selected members of the school board. With three out of six city council members present, a quorum was not in place and members of the media not alerted.
The Packet has learned that the few school board members at the meeting on Monday informed the mayor and councilmen that they would need an increase of 4.46 mills. 4.46 multiplied by the current value of a mill, $205,000 yields a total of $914,300, nearly $300,000 over the $600,000 they reportedly needed.
Mississippi law states that a school’s budget must be approved as long as it does not ask for more than 4% over the previous year’s request. Anything over that amount, and the city council is not required to approve the request.
The school board held a budget hearing Tuesday evening where they claimed that instead of the original increase of 4.46 mills, they could potentially need a 9.17 mill increase. [See related story in this issue.] That would mean over $1.8 million in additional funds. Andrews claims that the city just doesn’t have that kind of money.
Andrews says that the school district’s ad valorem tax request in FY11 was $13,672,000. The CMSD approached the tax assessor earlier in the year and asked him to hold the city’s annual city tax sale early in hopes of receiving more money, but Andrews says that’s just not possible. Even if it were held early, he said it wouldn’t make any difference. Andrews says that he “can only collect one hundred percent.” The assessor says that he has given the board the money they asked for and now the well is dry.
“If I collected 100% on 62.97 mills, I can only collect $13,100,000, period,” he said.  “That’s whether I have one land sale or twenty land sales.  To fund their tax request, it would take 65.11 mills, but someone decided to set it at 62.97.”
Andrews added, “Ninety-eight percent of the counties have their tax sales in August. So why aren’t the other 98% of school districts coming up short?”
All of this begs the question as to how the city schools went over budget in the first place.
“They’ve declared shortfalls for the past three years, but they haven’t been funding them,” Andrews said.  “This isn’t a one year thing, it’s starting to compound times three.”
With the previous millage rate of 64 and 65 mills in recent years, the school district was operating on a $13.5 million ad valorem tax request. Coincidentally, the city school district lowered the mill rate the same years that the new school was constructed.
Furthermore, city taxpayers have only been paying on the interest on the $22 million of debt for the new middle school. Andrews claims that for the first six years, the city of Columbus will be paying $600,000 a year on the school. In year seven, that figure doubles to $1.2 million dollars a year with taxpayers then paying off the principle balance.
The city has a total millage rate of 138.46, which includes both the city and the school district’s levies. Lowndes County has a total millage rate of 86.12. Andrews claims that from 1988 to 2008, the city and the city school millage value continuously increased. In 2009 that rate began to decline and has been on the down slope ever since. If the city school’s request for a 9.17 mill increase is granted, that only widens the gap between the taxes in the city and the county. [An increase of that size would, I believe, have to be approved by a public referendum. – SF] As an example, a business in the city that pays $400,000 in taxes would only pay $165,000 in taxes in the county. Should the city split the difference and agree to a 6 mill increase, that would mean an additional $14,000 in taxes for the business owner. For the average tax payer, that would mean significant but yet unknown increase on annual taxes.
“If you go up four to six mills in the city schools and one or two on the board of supervisors, you’re going to have an uprising,” Andrews said.  “You’re going to have so many people complaining that you’re not going to be able to handle it all.  It’s going to go straight back to the school board and the city council members – they’re the ones that are going to be held responsible for it.
“There are 28,000 people living in the city,” Andrews added.  “If you go up 10 or 12 mills, you’re going to see people leaving by the bucketful.”
When the bond issue passed back in January 2008, taxpayers were told that Hunt Intermediate and Lee Middle School would close and the new school would be the only city school for grades five through eight. However, the district plans to use Hunt for alternative school and special education services.  According to information released by PIO Janet Lewis, the district spent $527,000 on renovations. According to sources, that remodel was not put through the usual bidding process. In most cases involving tax dollars, the project is put up for a bid, allowing multiple contractors to bid on the project with the contract going to the lowest bidder.
CMSD attorney David Dunn was unable to be reached for comment. Dunn reportedly earned 1% on the $22 million bond package for the new middle school, which equals nearly a quarter of a million dollars. Mississippi law caps attorney’s wages on city projects at 1% but, in most cases, the sitting board will not allow the attorney to draw that much money.
The current interim superintendent, Dr. Martha Liddell, has reportedly ordered an audit of the district’s finances. An audit of the Columbus Municipal School has also recently appeared on the State Auditor’s website.
Sources within city government have told the Packet that former CMSD Superintendent Del Phillips will be in town Thursday and Friday.  Although no longer an employee of the CMSD or a citizen of Lowndes County, Phillips will allegedly participate in damage control meetings between the city and the city schools.

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1 comment

  1. No wonder Del Phillips hauled arse to Tennessee. And, how could they NOT know if it’s over budget a half million or two million? Is the firm doing the accounting for CMSD called Dewey, Cheatham, and Howe?

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