Meeker, De Beque school districts refigure their budgets as oil, gas revenue declines
MEEKER — For years, the Meeker School District’s property tax base was so enriched by oil and gas activity that it received no state funding, and in fact sent more money to the state than it got back, helping fund other districts.
But when that activity slowed and the tax base dropped, and it looked to the state for help, there was none to be found.
That’s because Meeker had to face a “negative factor” provision of state school funding, a budget-reduction measure already experienced by most other districts in the state but not yet by Meeker because of its previous lack of reliance on state funds.
The district already had approved a budget with a deficit of more than $500,000 last summer. But then it recently learned that its assessed property value fell more than expected, and that its level of per-pupil funding approved by the state would be even less than expected, leaving it more than $1 million short for the fiscal year.
That prompted Meeker’s school board to declare a fiscal emergency, and to hold a public meeting Thursday to inform people of the district’s problems and seek their input on where budget cuts might be made.
The district isn’t alone in its problems. The De Beque School District and Weld County’s Pawnee School District, which also rely heavily on oil and gas tax bases, both learned that lower-than-expected assessed valuation means they’ll have to absorb a sizable midyear adjustment to their per-pupil funding.
That’s a hard thing for a district like Meeker to do when teachers are in place during the school year, state Rep. Bob Rankin, R-Carbondale, told the state Legislature’s Joint Budget Committee on Friday.
“It’s really difficult for them to make this midyear change,” he said.
JBC staff member Craig Harper told the committee he also questioned the ability of the districts to absorb big cuts midyear.
“The districts definitely appear to be blindsided by the (assessed value) declines,” he added.
RELIEF BILL IN WORKS
The committee was swayed enough by what it heard Friday that it agreed to propose legislation to provide relief to the three districts. Rankin, whose legislative district includes Meeker, said it wasn’t clear to him whether the relief the committee is seeking would be partial or 100 percent, but he thinks it’s leaning toward full relief.
“I was really pleased with the outcome. … I’m hopeful it will turn out well,” he said.
But to be passed, a relief measure also might have to overcome objections from other districts that already have absorbed state budget cuts. And the measure also would apply only for this year.
“We really have to look at what is the impact going forward” for districts suffering the assessed-valuation declines, Rankin said.
Both going forward, and in considering a temporary relief measure, some discussion likely will focus on the goal of equity in funding between districts.
Dan Francis, a local resident who spoke at Meeker’s meeting Thursday, said there’s some validity to that goal.
But he added, “What’s really disturbing to me is that we’re sending more money to Denver than is coming back.”
He suggested that at least 90 percent of what the district sends to the state should be returned to it.
Said another resident, Joe Beck, “The people of Rio Blanco per capita generate more revenue than any other county. … We pay the bills for this state in a lot of ways.”
Board member Todd Shults agreed, “We do need to keep more of that revenue in Rio Blanco County.”
Beck said the state should look elsewhere for cuts, and also questioned why the district should do state-mandated school testing if it’s not receiving state funding.
According to the Rio Blanco County Assessor’s Office, energy companies make up the top-10 taxpayers in the county in terms of assessed valuation, at more than $1 billion in assessed value between them, or 80 percent of the county total.
The county has just shy of 3,000 active oil and gas wells. But drilling has dropped off dramatically and the current price of natural gas is relatively low.
Meeker school’s assessed valuation fell to $790 million for 2013, down from $905 million the previous year.
‘NEGATIVE FACTOR’ KICKS IN
Mary Lynn Christel, principal consultant in school finance for the Colorado Department of Education, said drops in assessed valuation in districts like Meeker, De Beque and Pawnee made them technically eligible for a state share of funding. But that’s when the “negative factor” formula kicked in — a formula that has been in place for years to reduce state funding.
“These districts have not felt the impact of that negative factor because they have been completely funded by local” tax revenues, she said.
Meeker was theoretically eligible initially this fiscal year for $123,000 in state funding — an amount that rose to $591,000 after its assessed valuation came in lower than expected, she said.
But in both cases the negative factor meant it got no state funding. That negative factor applies a 15.4 percent reduction to a district’s total program funding, but only comes out of the state share of that funding, she said.
Meeker’s per-pupil funding was $7,979 last year and is down to $6,887.
Christel said De Beque experienced a per-pupil funding drop of 16 percent, even more than Meeker’s. Harper said Friday that the “very significant hit” it took was a result of it ending up with 133 pupils, rather than a projected 114.
Christel said De Beque experienced a $64,000 difference between where its total program funding was projected to be at the beginning of the fiscal year, and ended up being after the negative factor was applied. That might not sound like much until considering that its total budget is only about $1.6 million, she said.
De Beque district officials couldn’t be reached Friday for comment.
WHAT TO CUT?
Meeker school officials have just begun considering possible cost-savings measures. On Thursday, district officials and the public talked about everything from switching to a four-day school week, to charging students more for participation in sports.
But such ideas also had their detractors, such as Makeysha Slaugh, who thought charging athletes more would result in a drop in participation.
“I don’t think it’s always fair to attack the sports” in looking at budget cuts, she said.
Others worried about teachers being let go, possibly including ones who may be high-paid but also are highly valued for the work they do.
“I will say that you have a few top-paid teachers that we cannot do without,” said parent Coleen Patterson.
Meeker school board President Bill deVergie said the board has decided to dip into its reserves so it can honor teachers’ contracts through the end of the school year if the state provides no relief.
Auditors recommend the district carry at least six months of reserves, and dipping into them would take it below that level.
“But I think the reason they recommend you have it is for situations like this,” he said.
The Joint Budget Committee’s action Friday suggests the district may be able to leave those reserves untouched, at least for the short term.
Meeker Superintendent Mark Meyer said Thursday the district had been doing a lot of politicking on the issue.
“We are being heard,” he said. “The message is getting out that what happened in Meeker, Colorado, shouldn’t happen, not in the middle of the (budget) year. … How can the state expect us to handle that at this point in time?”
QUESTIONS OF FAIRNESS
While JBC members ultimately supported pursuing relief for the three districts, some also expressed some discomfort about how fair that is to other districts that already have dealt with the impacts of state budget cuts. State Sen. Pat Steadman said the three districts’ high assessed values had insulated them until now.
“We’re holding them harmless from something other districts have been suffering for a while,” he said.
Harper told the committee he thinks other districts recognize the difficulty these small districts are facing in taking a big hit midyear, and he doesn’t expect a lot of pushback against a one-time fix.
But an “ongoing rescue” would likely raise serious equity concerns among other districts, he predicted.
Some committee members suggested small districts would be better able to absorb such budget hits if they merged to become larger ones where fixed administrative and other costs could be spread among a larger tax base.
“It boggles my mind why they won’t do that,” state Rep. Cheri Gerou said.
Rankin said the problem for a district like Meeker’s is the fact that its tax source, energy, is a volatile one, and it has to absorb the resulting revenue fluctuations.
“At the same time they’re getting zero contribution from the state,” he said.