Banks’ school spending went up while revenues went down

THE CONTINUING collapse of revenues last year appears to have caught the Banks County School System in a financial bind. Although the FY2012 audit of the system has not yet been posted by the state, an analysis of other state financial data indicates that Banks County spent more money than it took in last year.

The data shows that Banks County increased its per student spending by 4.3 percent in FY2012, from $7,874 per student in FY2011 to $8,218 per student last year. Still, Banks County fell below the state average of $8,558 in per student spending.
But as that increase in spending took hold in Banks County, revenues fell by five percent. Per student income for Banks County went from $8,369 in FY2011 down to $7,947 last year.

That means the system likely had to use reserves to make up the difference in its budget for FY2012.

But Banks County isn’t alone in this trend. According to state data for all Georgia school systems, for the first time ever the systems collectively spent more per student than they collected in revenue last year. That data indicates a serious financial crisis is ahead for many school systems due to a collapse in revenues.

Many systems had already been drawing down reserves to balance their local budgets, but the dramatic decline in income last year portends even worse days ahead for many public school systems.

Across the state, per pupil average spending hit a high in 2008 at $8,965 per student. Last year, that average had fallen to $8,558 per student, a drop of 4.5 percent between 2008 and 2012.

But it was in revenues locally and statewide last year that the real decline happened. Revenues on a per student basis hit a high of $9,120 in FY2008 for the state. Last year, revenues per student across the state had fallen to $8,486, a drop of seven percent.

So while many systems across the state have been cutting spending, it hasn’t been enough to offset the dramatic drop in income and the increase in students in many systems. Revenues fell last year at a faster rate than the cost cutting, a trend that can’t be sustained as systems use up the last of their reserve funds.

The drop in revenues has been due to both state cuts in funding to local school systems and to the collapse of the local tax digest in many communities, neither of which local school boards can control, unless they raise their local property tax rates. But with some systems’ rates close to the 20-mill cap, even that may not be enough to stem the flow of red ink unless there are even more cuts in spending. And raising the tax rate to offset the decline in property values won’t be popular, either.