Hi Next Gen'ers,

I just finished up a Board Meeting, and I can tell you that today's loophole of the day will be the approach for Owens Elementary. It's effective, but only if you qualify for the Small School Adjustment. Everyone else can wait for tomorrow's update.

Small School District Adjustment

Strategy:

AEL will take budget capacity but leave your cash. For example, if you would have ended the year with $100k in Budget Capacity and $100k in Cash...now you will end it with just $100k in Cash and no authority to spend it.

A small school district can increase their Budget Capacity with a Small School District Adjustment. In this case, let's say by $100k. You would now have $100k in Budget Capacity and $200k in Cash and an increased tax rate for the $100k. Ideally, you would want the cash to be at $100k and the tax rate at its normal level, so let's discuss how we would do that.

(Non-State Aid Districts) We are on current year counts, so you can underestimate your student count by a dozen or so students, and that will bring the tax rate down (also lowers Budget Capacity). On your Revised Budget, you can increase the student count to the actual number to give yourself the $100k in budget capacity back, and you will be made whole.

(State Aid Districts) You would calculate your full limit, but you would keep budgeted expenditures on Page 1 down by the $100k for Proposed and Adopted and then raise it back for your Revised Budget. Even after the major change in tax rate calculations, we never lost the ability to choose a lower tax rate. This combination of moves may be difficult to explain to the County, so when the time comes, feel free to reach out if you need help on it.

Pros:

It will be a full remedy for reversing the impact of AEL.

Cons:

It is a subsequent year fix, so in the first year, you need to absorb the impact. If it pushes you into a negative capacity situation, then you can take that as a cut in the subsequent year.

Legal References:

15-949 covers the Small School District Adjustment, and it's only for Elementary with less than 125 students or High School with less than 100.

Recommended For:

Districts that qualify for the Small School District Adjustment.

Disclosure:

Feel free to run any of these loopholes by your legal counsel or auditor, and I always welcome feedback on why the logic isn't sound.

I'll have a more universal approach tomorrow. Have a good day, everyone!

Jeremy

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