School Systems Roll Out Plans To Weather Funding Shortfall

JOHNS CREEK, GA -- In an effort to manage the funding shortfall created by the delay in receiving property tax revenue to fund its operations, the Fulton County and Atlanta Public school systems are taking considerable measures to brace for what could be a bumpy fiscal year due to the state rejecting the 2017 tax digest.

Fulton County Schools are putting a halt to any new hires or spending except for items related to as safety and security, federal/state compliance, fuel and utilities.

The district has also placed a moratorium on out-of-system travel, and student field trips are on hold while a process is developed to review them to limit district costs, it said Tuesday.

"When times are tough, we must prioritize," said Fulton Schools Superintendent Jeff Rose, Ed.D. "For the remainder of this calendar year, our focus will be on the daily safety and security of our students and to do everything we can to honor our employees with the compensation they deserve. Our plan of action includes necessary belt-tightening and cost-saving measures to help improve our financial picture through January."

The school system is seeking legal relief of the crisis by joining the Fulton County government and Atlanta Public Schools in pursuing a temporary tax collection order. A Fulton County Superior Court judge will hear the county's petition on Friday, Nov. 3.

Dr. Rose said the situation is "not through any fault" of the system, as it has maintained appropriate spending and prudent budgeting practices.

“The Fulton County Board of Commissioners put us in this situation when they voted to freeze property tax values at 2016 levels," he added.

This freeze led the Georgia Department of Revenue to reject the 2017 tax digest, citing concerns that the Fulton County Board of Assessors, which complied the county commission's resolution requesting a freeze, had the legal authority to roll back residential values. This rejection of the tax digest means the continued delay in Fulton County tax bills.

The district calculates its budget based on 63 percent of the revenue derived from property taxes, and without this revenue coming in, it affects the ability of Fulton County Schools to pay its bills in the coming weeks.

For its part, Atlanta Public Schools Superintendent Dr. Meria Carstarphen said the system will roll out furlough days for some employees, delay the $500 one-time payment until January for employees not on a teacher salary schedule and identify ways it can delay repaying its Tax Anticipation Note "in the event that we are unsuccessful in convincing the courts to intervene."

“I am hopeful that we will hear positive news from the courts this week and that our operations will not be significantly impacted,” she said.

APS said the freeze forced it to change its fiscal year 2018 general fund operating budget to reflect that revenues would be about $4 million less than what was originally planned. This initial delay "caused by the decision of the Fulton County Commission," the Fulton County tax assessor had to re-calculate property assessments and property notices had to be resent, delaying the typical process by more than two months.

In turn, APS had to pursue a $100 million Tax Anticipation Note (a short-term loan issued by states or municipalities to finance operations before revenue is received) with a real cost to the district of more than $470,000 in interest and fees.

APS notes the recent delay in the digest's approval has major implications for the district as well as other cities and entities that rely on a timely collection of revenues. About 62.5 percent of APS's general fund revenue comes from the Fulton County tax digest.

Over the past few days the district reviewed several options to address short-term cash flow issues. For example, the district plans to take precautionary measures to slow own outgoing cash payments by modifying payment schedules for contracted services, goods and obligations as appropriate to minimize impact to daily operations. Chief Financial Officer Lisa Bracken said this means APS will delay payments for goods and services until right before the bill is due.

In its petition, Fulton County argues the temporary collection order is the "only remedy available to address the exigency of the circumstances -- to begin the billing and collection process so that Fulton County, the cities, school systems and community improvement development districts can realize tax revenue in 2017 and 2018."

Unless the court grants the order, the county's governing body -- the Board of Commissioners -- will not be able to pay its debts; salaries of county employees, government officials or other people entitled to receive compensation; "maintain an orderly and normal function of county business and government affairs;" and maintain a desirable credit rating, among other outcomes, the petition states.

Superior Court Judge Alan C. Harvey will take up the case at 1:30 p.m. Friday in courtroom 4A at the courthouse.

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