TAMPA — Leaders of the Hillsborough County school district will sit down Tuesday morning and try to reach consensus on where to spend their limited funds.
The district has suffered steep and steady losses from its main reserve fund, transferring money over every year from a capital account to meet the state requirement for a balanced budget.
Addison Davis, the superintendent who assumed control in March, is determined to balance the operating budget, which could mean more staff reduction following a controversial round of cuts in the fall.
One possible obstacle: School Board members, several of whom won their seats in the November election with strong backing from the teachers’ union. Leaders of the teachers’ union have argued that the school system does not have an over-abundance of teachers, as some consultants have maintained, but that there is excessive spending elsewhere, including in the executive ranks. One strong supporter on the board for Davis’ austerity plans, Steve Cona III, lost his bid for re-election to Nadia Combs.
Davis plans to present his ideas to the board for discussion at 9:30 a.m. No vote will be taken, as it will be a workshop setting. But the meeting at School Board headquarters, 901 E Kennedy Blvd. in Tampa, is open to the public. And it will be livestreamed on the district website and on Facebook.
One idea Davis mentioned in recent months is to campaign for a local option property tax, the kind that exists in Pinellas County and elsewhere. In 2018, Hillsborough voters approved a sales surtax. But that money, now being used to repair dilapidated school air conditioners across the district, cannot be tapped for ongoing expenses such as teacher salaries.
But the next election is not until November of 2022, and Davis said the district needs the money sooner.
By the numbers:
Hillsborough’s combined overall budget exceeds $3 billion a year. That includes all money from the state and federal government, local taxes, food service, capital accounts and debt service. The state portion is closer to $1.8 billion.
Over the last six years, the district has transferred $197 million from capital accounts to its general fund to cover budgetary shortfalls. Those transfers are legal, as some of the money pays employees who work on capital projects. But the practice is frowned upon in the investment community, which monitors the district’s financial health on behalf of bond holders and can adjust the district’s credit rating downward if spending appears excessive. And the yearly amounts of those transfers are growing. For the 2019-20 school year, it was $40.2 million.
State law requires a reserve in the operating fund of at least 3 percent of anticipated revenue. A district policy, enacted after a financial crisis in 2015, calls for 5 percent. While the reserve amount fluctuates wildly from month to month, when the books closed in June, it was somewhere between 3 and 5 percent. When it dips below 3 percent, the state puts the district on warning. Below 2 percent, the state can step in and take over the district.
Until this past year, Hillsborough has not had to borrow money to meet payroll. The district takes out a $100 million line of credit from Wells Fargo Bank, but has never had to access that money. This year, however, the district ran so short on cash in November that it took out a tax anticipation note, or bridge loan, for $75 million and had to spend most of that money. They are not repaying the loan with property tax revenues.
A big drain on the budget comes from the migration of students from district to charter schools. Charter schools use state money, but are operated independently; and the money flows to the charter operators, some of which are for-profit companies.
More than 30,000 Hillsborough students are in charter schools this year, or 14 percent of the public school population. Assuming each student is funded for $7,300 in state dollars, that’s nearly $225 million that leaves the district’s operating budget, while many fixed costs remain.