City School Board Hears FY21 Budget Proposal

TUSCALOOSA, AL. — Budget season abounds and, like many, Tuscaloosa City Schools (TCS) is expected to face a range of financial shortfalls due to the ongoing COVID-19 pandemic.

During Tuesday's special called meeting of the Tuscaloosa City Board of Education, a first reading of the Fiscal Year 2021 budget was read before it is voted on and approved next Tuesday ahead of the start of the fiscal year on Oct. 1.

TCS Chief School Financial Officer Jay Duke began the hearing by explaining projects over the last several years leading to the present. Citing the school system's past capital and strategic plans, along with a realignment of sales taxes around 2014, Duke provided more details relating to TCS's present financial state.

"During that time there was a buildup of the general fund because of those things, then there was a planned spend of built up reserve," he said. "Over the course of about the next four years, there was a spend of built up reserves and during that time some unexpected overages occurred and that has created a challenging environment for the current budget."

TCS's cumulative total from FY2016-FY2019 came in at $10.7 million over budget — $4.3 million in Fiscal Year 2019 alone.

In an overview of the system's general fund, a $1.16 million revenue shortfall from the previous year is planned for going in to FY21, with $104 million in revenues proposed for the new budget. Conversely, proposed expenditures for the upcoming fiscal year are up slightly by $38,000.

Duke then presented the city's revenue position with respect to state and local funding sources, both of which will see reductions going in to the new budget. In total, these sources will result in a combined $1.6 million revenue decrease from the previous year going in to FY21.

From the state funding, which will be reduced by $3.6 million from last year's budget, $2.4 million was budgeted for Advancement and Technology funds, which are allocated by the state legislature. The funding is awarded, Duke explained, to provide a one-time annual boost for investments in technology.

"[Advancement and Technology] has positively helped our revenue in the past and the thing about that, it’s not necessarily guaranteed for the next year," he said. "It's based on some prior-year calculations, so the legislature, I’m going to say, called a time out on the full allocation for this year and caused this reduction in the amount."

In 2018, Duke said, TCS received $500,000 for Advancement and Technology, then $2.7 million in 2019.

"In Fiscal Year 20, where we had initially been told we were getting $5 million, that amount was reduced to $2.4 million," he said. "So, going forward, we have no assurance we will get that at all."

Duke went on to say it could be possible that the legislature takes up the issue in the spring to reallocate the money, but expressed the uncertainty and risks involving TCS holding out for the money while in the final stages of hammering out its budget.

In providing a breakdown of TCS's general fund budgeted salaries, Duke said 59% — roughly $38 million — was allocated for teacher salaries.

"This is probably pretty standard around the state," he said.

Instructional services, however, have been cut to the tune of $761,000 going into the new budget year, while instructional support services was also slashed by $78,000.

Duke elaborated on the full funding system for TCS as the new budget is crafted, saying the school system is financed in the following percentages: Federal (13%); State (45%); County (38%) and City (3%). The funding from the city of Tuscaloosa included in the breakdown does not factor in funds received from Elevate Tuscaloosa.

Discussing other revenue issues facing city schools, Duke referred to how TCS is missing out on funds collected by the Simplified Sellers Use Tax (SSUT).

"More sales tax has been diverted away from city schools, because of the SSUT law and city schools are cut out of the mix," he said. "If it's an online purchase, we don’t get any of that sales tax. We’re missing out on tens, if not hundreds of thousands of dollars a month."

SSUT took effect in 2015 as a voluntary 8% tax on online vendors in 2015 and became mandatory beginning in January 2019. This resulted in a significant jump in sales tax revenue.

Duke underscored the notion that the law has the potential to benefit city schools, but changes to the law as it is written will need to be made to make that possible in the future. When asked if online grocery purchases at local chains such as Target and Publix would see money diverted to schools, Duke answered that it was a mixed bag, depending on how the companies handle it.

"That goes to the SSUT and is dispersed to the city and county," he said. "There may be a provision, depending on if it asks for your zip code, but a lot of those don’t."

A spot of good news, Duke said, could be seen in the growth of the student population for the city.

Since 2017, Tuscaloosa City Schools reported a 3.8% increase in Average Daily Membership (ADM), with the most substantial jump coming from FY19 to the current fiscal year. During that time, TCS added 250 new students to bring its overall student population to 10,370.

Since 2017, the system has added 380 new students, which Duke pointed to as gains to be celebrated.

"That’s the equivalent of taking Hale County High School in Moundville, Alabama and dropping it in our system," he said. "So 3.8% is a lot of growth in my option. We’re a growing system as you all know."

The Board of Education will vote on the budget Tuesday, Sept. 15 during its next regular meeting beginning at 6 p.m.