Fayette County Public Schools expect revenues from various taxing and interest sources to decline by $3.2 million in the current school year's working budget as a result of the sagging economy.
Julane Mullins, the district's associate budget director, told the Fayette County school board Monday night that the school system will adjust its current operating budget to make up the bulk of the shortfall by using dollars previously budgeted for a proposed employee attendance incentive program.
Mullins stressed, however, that the schools "remain on solid financial footing" and that the staff is closely monitoring the financial situation.
According to Mullins, the district now expects to receive $800,000 less in motor vehicle tax revenues in the current budget; $900,000 less in revenue from Lexington's occupational license tax; and about $1.5 million less in interest earnings.
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Several factors are involved in the projected declines, which are based on revenue collections over the past several months.
Mullins said the state is changing the way it figures motor vehicle taxes, switching from Blue Book valuations on vehicles to average trade-in values instead. According to Mullins, that's expected to result in about a 10 percent decline in motor vehicle values, translating into fewer motor vehicle tax dollars for the school system. Auto sales, which are declining across the country, also are contributing to the shortfall, Mullins said.
Lexington is running a 6.6 percent unemployment rate, which is sharply cutting into revenue the schools receive from the city occupational license tax, Mullins said. Interest earnings on the school system's funds are down because the schools are earning an interest rate "significantly less than 1 percent," she said.
To make up for the $3.2 million shortfall, the district proposes using $3 million it previously set aside for a program aimed at encouraging bus drivers and teachers to come to work.
An additional $800,000 will be taken from contingency funds.
Mullins indicated more adjustments might be necessary if funding from the state Department of Education is reduced as has been discussed, and the state carries through with plans to charge local schools for the cost of maintaining the Infinite Campus computerized student information system.