School funding can be tricky to understand. For example, how can the Geneseo School District spend more than $36.5 million on building improvements yet still face the need to cut programs or raise taxes to cover an education fund deficit?

About this story: Geneseo school officials won't put a referendum on the March ballot asking for a tax increase, but district officials are considering program cuts and additional fees to make up for an ever-increasing defect.

School funding can be tricky to understand. For example, how can the Geneseo School District spend more than $36.5 million on building improvements yet still face the need to cut programs or raise taxes to cover an education fund deficit?

An individual might have a checking account and a savings account and be able to move money freely between the two, but school funding doesn’t work like that.

Dollars raised by a one-cent sales tax approved by voters in 2013 can only be used for “school facilities.” So when a customer fills their fuel tank at a Henry County gas station or purchases clothing downtown Geneseo, the funds generated by the tax can only be used to make improvements or upgrades at the school property itself.

The Geneseo School District has received, on average, $942,374 per fiscal year from that sales tax — every penny of which must go toward school facilities.

When it comes to paying for teacher salaries, bus transportation, classroom supplies and everything else that constitutes “education funding” districts must rely primarily on local property owners and the state.

Geneseo school officials say they expect to receive about $4.9 million from the state. A decade ago, the state paid Geneseo $7.48 million.

With state aid down and unlikely to increase, the burden to make up the difference comes from local taxpayers via their property tax payments.

By law, the school district is allowed to levy certain amounts in 11 categories, such as the education fund, which is the district’s largest fund.

In fiscal year 2017, ed fund revenues were $15.9 million ($10.1 million of that from local taxpayers) while expenses were $16.9 million.

By comparison, in fiscal year 2003, ed fund revenues were $16.6 million ($7.9 million from local taxpayers) with expenses at $16.4 million.

The current education fund rate of $2.35 per $100 of equalized assessed valuation was approved by voters three decades ago in 1987.

Funds generated by the tax levy aren’t enough to make up for the state’s decline in funding.

As a short-term fix, the Geneseo School District has relied on borrowing money, an approach that can be costly. Issuing a $4 million working cash bond, for example, costs the district approximately $570,000 in closing costs, issuance fees and interest expenses.

A suggested solution was to ask voters to approve a 43-cent education fund tax rate increase. The increase could generate an additional $1.5 million a year.

However, some school board members were leery to put a tax rate referendum on the March 2018 ballot so soon after a major school district building project.

“I do think a tax rate increase is what this district needs to do for long-term sustainability, but I’m not recommending the referendum for March,” superintendent Scott Kuffel told the school board during a meeting on Thursday, Oct. 12. “There’s no point in running a referendum if it’s not going to pass.”

School officials recently held a number of small group “LearningLEAF” meetings with community members to discuss financial options for the district.

“When we asked them what we should stop offering, they said ‘nothing.’ But then added, ‘We don’t want taxes to increase, either,’” said Kuffel.

That approach isn’t sustainable, he said.

“We have a district that wants suburban-level services while paying deep south taxes,” he said.

Kuffel said residents also told him “everything needs to be on the table to be reviewed for cuts before taxes increase.”

“No, everything cannot be on the table,” said Kuffel, adding federal and state mandates require the district to provide certain programs including: special education, core instructional programs, physical education, pre-kindergarten programs and breakfast and lunch service.

Instead of going to taxpayers for an ed fund referendum, Kuffel presented the board with an array of options to both reduce spending and increase revenue.

A possible option, he said was charging fees — which he described as “user taxes” — for everything ranging from activity participation to technical use. Entry admission could be required for school events, such as concerts and sporting events.

The district could increase class sizes and cut employees, including eliminating an administrator, up to eight elementary teachers, three or four high school content teachers, one consumer/technical education teacher, one art teacher, one or two band/choir teachers and one foreign language teacher.

The number of coaches and activity sponsors could be reduced, said Kuffel, emphasizing assistant coaches and lower level “feeder” programs may be eliminated.

The district could adopt a “last in, first out” policy for programs — meaning the district’s newest activities — bowling, bass fishing and gymnastics — would be the first eliminated.

Though Kuffel said he wasn’t recommending any specific change, he wanted to “throw the options out there” for the school board.

Another option for the board is to use the district’s tort/liability levy category to cover $500,000 in salary cost, shifting some of the salary burden from the ed fund. Doing so would increase taxes but could be done without a referendum.

“We wouldn’t pass a referendum, but people would pay for it over time,” said Kuffel.

“Nobody made school financing easy, and it’s only going to get harder,” he said. “I’m not saying we’re in crisis mode, but there is a seriousness about the situation.”