The Pattonville Board of Education on June 13 approved a $111.3 million operating budget for the 2023-2024 school year. The district will likely have a net surplus of about $2.2 million. The 2023-2024 year is one of reassessment for property in Missouri and expected growth in property tax assessments will result in an estimated increase to this revenue stream of between 2% to 5%.
The 2023-2024 budget was established based on several factors:
- Increase expected in existing property values - Pattonville’s revenues are based on the assessed value of property in the district as set by the St. Louis County assessor’s office. Property values are assessed every two years, with 2023-2024 being a reassessment year. Based upon preliminary assessed values provided by St. Louis County, it is estimated that total property values in 2023 will significantly increase due to reassessment. Preliminary reports show residential and commercial real estate assessed values increasing 20.7% and 38.3%, respectively. The increase is primarily due to the current buyer’s market and low housing inventory. In accordance with the Hancock amendment, the increase in taxes Pattonville collects cannot exceed the lesser of one of three factors: the change in assessed values; the change in Consumer Price Index (CPI), which is 6.5%; or 5%. Based on this preliminary information, local property tax revenue is projected to increase 5%. Due to the significant increase in assessed values, significant protests to reduce these values can be expected. Therefore, to be conservative, local property tax revenue has been budgeted to increase 2% and generate approximately $3.5 million in total property tax revenue (including debt service) and $2.8 million in operating property tax revenue. Local revenue sources account for 82.9%, or $101 million, of the district’s total revenue budget, excluding bond sales, and current property taxes make up $89.9 million of this revenue.
- Commercial protests expected to increase - Protested assessed values continue to remain a challenge for St. Louis County. During the 2021-2022 school year, tax revenues decreased $1.6 million due to successful commercial property protests, which was the highest amount of settlements the district has paid back to taxpayers. During the 2022-2023 school year, there were no significant settlements to pay back to taxpayers. The 2023-2024 budget assumes a more typical level of protests as was seen prior to the 2021-2022 school year.
- State revenues - Only 10% of the district’s budget comes from state funding. Next year’s budget represents a revenue increase of 10.5%, or $1,056,680, at the state level. Total state revenue is estimated to be $11.95 million in 2023-2024, most coming from the Foundation Formula, the state’s formula for allocating education funds. Under this formula, Pattonville continues to be a hold harmless district, receiving $5.1 million per year or approximately $829 per student. The hold harmless designation means Pattonville received a higher level of funding under an older state formula than the current formula provides. As a result, Pattonville is held to the same level of funding it received in 1992. Pattonville receives the 511th lowest level of funding from the state out of 520 districts. The remainder of state revenue includes transportation, which is fully funded for the second consecutive school year since 1991, and early childhood special education, which is reimbursed at 100% of the district’s allowable costs.
- Federal funding relief for student services - Pattonville’s budget includes $7.8 million in federal funding. An estimated $2.4 million is expected from the National School Lunch and School Breakfast Program payments. The budget also includes a $3.8 million payment under the American Rescue Plan Elementary and Secondary School Emergency Relief (ARP ESSER) fund, enacted on March 11, 2021. These funds will provide services to students to combat learning loss experienced during the pandemic as well as provide improvements to districtwide HVAC systems. The total amount of ARP ESSER funds available is estimated to be $7.1 million. Of that, $1.9 million was received in 2022-2023 and $2.4 million was utilized in 2021-2022. Funds have been devoted to learning loss, iPad replacement at the elementary and middle school levels, device replacement for certified staff, middle school English and math support and adding positions to support instruction and learning loss.
- Three-year agreement with staff - Pattonville is in its second year of a three-year agreement in which teachers and support staff receive an overall 3.7% increase in salary and benefits each year. However, the actual cost to the district is lower due to staff retirements and resignations, many of them due to a separation incentive plan (SIP) offered in the 2021-2022 school year. Those accepting the incentive are being replaced by staff with fewer years of experience and lower salaries. As a result, $500,000 of the projected savings is being used to make market adjustments to specific positions where Pattonville is experiencing staffing shortages. Overall, however, salaries will increase a total of 4.9% for 2023-2024, which is above the 3.7% salary schedule increase because the 2022-2023 budget was reduced for vacancies in support staff staffing. The 2023-2024 budget is set with expectations that the district be fully staffed. An additional $500,000 was budgeted for increases to the lower quartile of the support staff schedule to be more competitive.
- Small increase in health costs - Benefits will increase by 2.97% based on the district’s insurance allowance, taxes and contributions to the retirement system. The increase is primarily due to staffing vacancies from the 2022-2023 school year and expectations of a full staff in 2023-2024. The allowance for eligible staff to select health and dental benefits has been flat for five out of the last nine years, and is budgeted to remain flat for the 2023-2024 school year. This is due to a successful bid negotiation with Anthem, Express Scripts and Delta Dental resulting in approximately $2.5 million in savings over the next three years. Last school year, the allowance for employee health and dental insurance increased by less than 3% and has only increased four times in the last 10 years.
- Debt service fund increases due to construction - Work on Prop S, Pattonville’s $111 million no-tax rate bond issue began in the 2022-2023 school year with most of the expenses being architect fees and stored materials from early bid packages. Construction on four building additions began on July 1 and bond construction costs will significantly increase during 2023-2024. The debt service fund will increase $2,684,780 for the 2023-2024 fiscal year. Expenditures in this fund are for scheduled payments of principal and interest on the district’s outstanding general obligation debt, or bonds. The projected Prop S debt service payments for $40 million of the $111 million in general obligation bonds are not included in this analysis and are anticipated to be sold in August 2024. Debt schedules will be revised once the sale is final. Based on the current $.49 debt service tax levy, the district will begin the 2023-2024 fiscal year with $12.1 available in the debt service fund balance. Currently the district maintains approximately one year of principal and interest payments in fund balance to accommodate the future debt payments from Prop S.
- Food service funding - Funding for food service is expected to increase $150,000 overall from the 2022-2023 school year. During the pandemic, all meals were fully reimbursed by the federal government. The reimbursement was higher than the cost the district has charged families in the past, which allowed the district to offset deficits experienced during the 2019-2020 and 2020-2021 school years. However, the federal reimbursement program expired at the end of the 2022-2023 school year. During the 2022-2023, meal purchases did not return to pre-pandemic levels primarily due to staffing shortages and reduced meal offerings and a la carte options. In 2023-2024, food service sales are estimated to increase between $15,000 and $735,000. Pattonville continues to be one of only seven districts in the area to offer free breakfast.
- State funding of transportation - Based on state statute, the state is expected to reimburse districts for 75% of their eligible transportation costs. During the 2022-2023 school year, and for the first time since 1991, the state paid its full portion of transportation costs. This resulted in $1.2 million in additional revenue for Pattonville that has been used to fund transportation in the past. The state has budgeted for full funding during the 2023-2024 school year as well.
- Rising supply costs - The overall budget for supplies will decrease by $334,567 or 4.13%. New textbook adoptions increased by $369,700, food service expenses increased by $150,000 due to market conditions and transportation tire prices increased by $30,000 due to inflation. However, these increases were offset by $928,000 in building-level carryover budgets. In Pattonville, schools retain their unspent budget dollars for future spending needs. Any unspent funds will increase fund balance in 2022-2023, and will then be transferred back to the buildings during the 2023-2024 budget revision.
- Capital spending on high-priority needs - The new budget includes an increase of $2,901,271, or 51.23%, to fund normal inflationary increases and two major, one-time, capital projects: improvements to the district’s Wi-Fi network costing approximately $1 million and HVAC improvements estimated at $2.2 million and partially funded through ESSER III funds.
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