The North Kansas City School District is facing a $4 million budget shortfall for the 2013-2014 school year after learning that Clay County’s assessed valuation has declined.
The district initially had been anticipating a modest increase to the it’s assessed valuation when it developed a preliminary budget for the upcoming year. But last week Clay County Assessor Cathy Rinehart reported that the district’s 2013 total assessed valuation had actually fallen by 3.25 percent.
Assessed valuation figures, which include residential, commercial, agricultural and personal property within Clay County, are used to determine annual school tax revenues and account for approximately 66 percent of the district’s total operating budget each year. The decrease reported last week will mean that the district will receive $4 million less in tax revenue than it did the year before, leaving Board of Education members uncertain of how they will handle the shortfall.
They plan to spend the next few months before the district needs to finalize its budget in August determining the best way to address the revenue drop.
While no decisions were made at last week’s board meeting, Superintendent Todd White said the district plans to issue a hiring freeze on unfilled positions until budget decisions can be made and will begin reviewing contracting services, supplies and equipment expenses to see if savings can be found.
He said the district also may have to consider tabling some projects and programs officials had planned to implement next year. Some of these programs could include ACE — an alternative education program — the Northland Advanced Career Studies, and Project Lead the Way Engineering.
“I am not suggesting all of those things are going to be cut,” White told the board last week, adding that the programs will need to be re-evaluated and assessed in light of the budget shortfall.
Rinehart attributed the drop in assessed valuation to a recent lawsuit loss regarding agricultural assessments, as well as lower home appraisals by mortgage lenders.
She said part of the reason for the decline was that more homeowners had re-financed their homes and during that process mortgage lenders had given the homes a lower home appraisal than they had before. Appraisal values dropped particularly for small homes with larger lots, she said.
“North Kansas City has a predominance of small homes with large lots,” she said.
Board member Terry Ward said he was surprised the district’s residential assessed valuation was slightly below the level it was in 2004, despite growth and new construction over the last decade.
“I don’t understand it,” he said.
Rinehart said she isn’t able to explain why the residential assessed valuation hasn’t increased more since 2004.
“It is surprising and it’s not what you’d expect because there are more homes but the value just isn’t there,” she said.
Last week, board members voted to approve a preliminary budget for the upcoming 2013-2014 school year; however, the preliminary budget was developed before they were aware of the drop in assessed valuation.
Board members agreed that the budget would need to be re-worked before August, when a final budget would need to be approved.
“We have about $4 million we are going to have to do something about,” said Board President Joe Jacobs.
About 80 percent of the district’s operating budget goes to salaries and employee benefits each year. White said the district would have to find the additional money to make up for the shortfall from somewhere in the remaining 20 percent of the operating budget.