Albemarle County residents will be paying higher real estate taxes this year.
The Albemarle Board of Supervisors Tuesday adopted a tax rate of 79.9 cents per $100 of assessed real estate value. This is a 3.3-cent increase over the previous rate of 76.6 cents, and 1.6 cents above County Executive Tom Foley’s proposed rate of 78.3 cents.
Within the tax hike, 0.7 cents will fulfill state stormwater mandates related to improving the health of the Chesapeake Bay, and 1.7 cents will go into the General Fund that follows the traditional 60/40 split between the Schools and the County.
Due to school division’s dire financial situation this year, 0.9 cents will be dedicated to the Schools, which translates to $4.4 million more than last year heading to the division.
However, even with dedicated revenues, Albemarle County Public Schools will find itself $3.9 million short of their $164.3 million funding request.
“We’re going to see a step backward in the quality of education in Albemarle County Schools,” School Board member Steve Koleszar said. “That’s not to say we’re not a great school system with good leadership who are doing right by kids, but we’re not going to be able to do the job that our kids deserve.”
Much of the difficulty the Supervisors faced this year dealt with the school division’s funding request, which was six percent higher than last year’s $155.3 million budget.
Koleszar said that jump is out of their control.
“The reason why we have such a huge shortfall is not that we have unrealistic dreams of what we would like our budget to be, we’re just trying to maintain the services we have,” Koleszar said.
The largest single driver of the Schools’ need this year was a School Board- and Board of Supervisor-mandated two percent salary increase for all County and Schools staff. An increase at that level would cost the school division about $3.2 million.
However, because of the extent to which the schools now have to cut, and because of the County and the School’s efforts to reach pay commonality, which is local government and the school division’s attempt to pay employees equally for similar jobs, Koleszar said the salary increases are “on the table” for reductions.
If the Schools opt to lower the proposed salary increases, Board of Supervisors Chair Jane Dittmar said the Supervisors would follow suit.
“This is an agreement that has been in place for years, so that would trigger [County government] having to meet the School Board,” Dittmar said.
Commonality applies to classified staff on both sides of County government. Teachers are not classified, and are on their own pay scale.
Because the School Board could reduce the raises for both sets of its employees, thus triggering the County to do so, and because the Supervisors don’t yet know the revenue figures coming from Richmond, they opted not to adopt a budget Tuesday.
The second largest expenditure was a jump in state-mandated Virginia Retirement System contribution rates, which comes with a cost to the schools of about $2.3 million.
Supervisor Kenneth C. Boyd took issue with the ‘mandate’ wording.
“Only in government would covering the cost of retirement plans for our employees and covering an increase in their health insurance be considered a mandate as opposed to a benefit,” Boyd said.
“My understanding is that we’re moving away from that model for new employees,” Supervisor Diantha McKeel said. “But the reality is that you’re sort of stuck where you are with what has been promised to state employees.”
Supervisor Liz Palmer agreed with Boyd’s distinction, but argued that the Commonwealth could have raised the funds to cover VRS rates through an income tax, which she called “a fairer way to tax income, than the property tax.”
“They’re mandating that we make these adjustments on a property tax, which is not a good proxy for income,” Palmer added.
In special circumstances, the Supervisors have extended one-time money to help bridge shortfalls, however they decided not to do so at this time.
One such source is the annual fund balance which represents monies budgeted but not spent. After the audit at the end of each fiscal year that funding is now directed to the Capital Improvement Program.
Adding to the financial woes, much of the school division’s fund balance has been reallocated in recent years: a $1.7 million transfer as directed by the Board of Supervisors, and a $1.5 million loss in projected savings due to a 75 percent drop in employee turnover.
With employee turnover and retirements, new staff are often hired at a lower position on the pay scale, resulting in payroll savings.
In addition to the losses in savings, enrollment is expected to rise by 130 students next year, budget documents show.
“Before the audit, we’re not going to be absolutely sure what those numbers are going to be,” Dittmar said. “If the audit shows us that we’re pretty much spot on [with our budgeting], we still don’t have a lot of margin for error.”
Additionally, money taken from the fund balance is money not going into the capital budget, which some Supervisors didn’t support.
“I’m very concerned about the CIP, but I’m even more concerned about people, entities, or governments when they fall short of money, because it costs you more,” Palmer said. “I don’t want to cost citizens money because we took a chance.”
The Supervisors will have final numbers from the FY14 audit in October, at which time, Dittmar said, she hopes they take up the one-time money conversation again.
Supervisor Brad Sheffield said he hopes next year’s budget talks are balanced equally between the Schools and County needs.
“We’ve talked a lot about School spending and School allocation and we had very very little conversations about the County side spending,” Sheffield said.
The School Board will have a budget work session on Thursday.