Schools expect revenue drop in ’11

But expect to have $19

St. Charles Parish School Board members said they may slow down spending in the next couple of years after being told that a drop in tax revenues will decrease the 2011 budget.

Jim Melohn, chief financial and administrative officer for the schools, said that in 2011 there will be an unexpected drop in sales tax and ad valorem tax revenues.

“Generally ad valorem (taxes) are very predictable…this was a very unusual item,” Melohn said during a December meeting.

The drop in ad valorem taxes is due to a decline in taxes paid on oil stored at local refineries and will decrease the board’s budget by $1.5 million in 2011.

Melohn said that the ad valorem tax revenues have dropped only once in the past 29 years.

While the decline was unexpected, Melohn said the school board has done an outstanding job of using past increases to “save up for the rainy days” and the drop will not cause any problems with the board’s fund balance. The general fund budget is still expected to have a $19 million surplus at the end of the fiscal year.

Still, Superintendent Rodney Lafon suggested that the board “take a break” and spend cautiously for the next couple of years to make sure the budget is not stretched too thin.

“Maybe we need to slow it down a little bit to see how it goes over the next two years,” Lafon said.

This comes after two major wing additions at Harry Hurst and J. B. Martin middle schools will have the district paying $720,000 a year for the next 14 years to repay construction financing bonds.

Melohn said that the school district has been able to do a lot of capital improvement projects in the past few years due to good years from sales tax, but now may be the time to pull back on future projects until expenses work out.

The board will be keeping a close watch on the budget in the coming year because while revenue will decrease, retirement costs are expected to increase by about $2 million. That increase comes after a $4 million increase in the past year.
“We’ve been told not to get our hopes up on a reduction next year,” Melohn said.

About 45 percent of the district’s budget is made up of ad valorem taxes, but Melohn said he does not expect another decline in the future because oil prices have rebounded.
The board will discuss further projects and adjustments to the budget at its retreat in January.