School Tax Increase Looms on the Horizon
By: Wolf von Baumgart, Staff Writer
In the face of the Sussex Technical High School District’s growing financial and enrollment complications, state legislators are sponsoring remedial measures.
House Bill 100, filed last Thursday, will grant the STHS District the power to impose a 5.5 cent tax increase beginning July 1st for the 2016 fiscal year. In FY 2017, the district will be allowed an additional one cent increase. This will inflate the overall rate to 30 cents per $100 of assessed value, costing the average Sussex County homeowner $8.86 in the first year and $10.47 in the following year.
The impending school tax increase is the result of various factors:
● A 19.3% increase in student enrollment from 1295 in FY 2011 to 1545 at present.
● Disparity of the rate of growth of the Sussex County property tax base with the STHSD’s aggressive expansion rate.
– According to a report issued in late 2013 by the Sussex Tech Tax Rate Review Committee, the annual growth of the county’s property valuations dropped from 7.7 percent in 2006 (the highest rate in more than 20 years) to an annual average of less than 1.6 percent from 2010 through 2013.
● The preceding factors led to a steep decline in the STHSD’s cash reserves from $ 5.17 M in FY 2011 to less than $ 1.25 M, expected by June 30, 2015 end of the current budgetary cycle.
● Sussex Tech’s expansion came after a 19 percent property tax increase that was phased-in over three years, from 19.71 cents per $100 of assessed property value in FY 2007 to 23.5 cents in FY 2010 — the highest allowed by current state law.
According to Speaker of the House, Pete Schwartzkopf (D – 14th District, Rehoboth Beach) the numbers speak for themselves. “The flagging economy, combined with the overly optimistic decisions made by Tech’s leadership, created a financial imbalance, requiring them to burn through about $1 million in reserve cash annually over the last four years. That is not sustainable and it needs to be fixed. Our bill will do that”, he said.
State House Minority Leader Danny Short (R- 39th District, Seaford) said that the school’s leadership was pursuing a goal of their own making. “There was no directive from the state. There was no plan approved by county residents. Sussex Tech officials set out on their own quest for their own reasons. They pressed ahead, even when the financial implications of their decisions made it clear they needed to take their foot off the gas,” he stated.
He also said the main focus of the Sussex delegation’s work on a bill was to ensure the continued, effective operation of the school and address several inequalities that have long drawn criticism from the county’s other public school districts.
The Sussex Tech HS District’s officially stated vision was for STHS to serve 20 percent of Sussex County’s high school-age students by 2020. That would have raised the student body total to 2120, based on population and demographic projections.
The response of Sussex Tech’s state-appointed District officials to the school’s intensifying fiscal complications was to press the General Assembly for authority to raise property taxes again by 114 percent over six years, ending with a new rate of 50.5 cents per $100 of assessed value.
The consensus legislation is intended to restructure the district’s finances and student enrollment and allow time to make further needed adjustments. It proposes reducing the student population in phases by 295 over the course of the next three academic years by cutting 100 students in 2015-16, 100 students in 2016-2017 and 95 students in 2017-2018. The property tax increases would then revert to the current 23.5 cents per $ 100 of assessed value on July 1, 2017 (in FY 2018).
A recent report commissioned by House Concurrent Resolution 2 indicated Sussex Tech’s growth would have required major construction of new facilities costing between $280 and $316 million. The report concluded that Sussex Tech’s expenses will exceed income by $2.53 million in the upcoming fiscal year and by more than $3.34 million the following year if no action is taken. This would have additionally burdened Sussex County property owners with further school tax increases (without a referendum) to finance the local share of the project, estimated to cost approximately $112 million to $126 million, according to a plan on file with the Delaware Department of Education.
Some of the bill’s proposed reforms would restructure how students are selected to attend Sussex Tech:
● A lottery would be held when applicants exceed the number of available slots for the new freshmen class. While the available openings would be filled in the order the applicants are drawn, existing state law is designed to ensure proportionate student body composition at Sussex Tech from all Sussex County school districts.
● Sussex Tech would be prohibited from excluding from consideration any freshman class applicant eligible for promotion to the 9th grade.
● Sussex Tech administrators would be prohibited from summarily returning a student to his or her original school district for disciplinary reasons without the consent of the student’s parents and officials in the home district.
● “Legacy” selections in which a sibling of any current or prior Sussex Tech student is given preference for admission would be restricted to cases wherein a sibling of an applicant is currently enrolled at the school.
A pre-existing labor contract has precluded the General assembly from considering modifications to Sussex Tech’s salary structure. In fact, STHS teachers are scheduled to receive a three percent raise next year. The state legislature could possibly take action after the contract expires at the end of next year.
While conceding the bill will not please everyone, Representatives Schwartzkopf and Short believe that it provides a reasonable path for returning the school to a firm financial footing.
“The combined steps we’ve proposed in our bill will make the school whole and temporarily stop it from incurring further deficits over the next two years,” Speaker Schwartzkopf said. “This will give Tech’s superintendent and school board the breathing room they need to make substantive changes so the school can avoid operating in the red when the temporary tax hikes vanish in two years.”
“This bill protects students’ futures while giving the superintendent and school board the time they need to consider carefully the difficult choices they will be weighing,” Representative Short said.
With reportedly more than 700 freshman applications pending for admission to next fall’s Sussex Tech class, the sponsors say they intend to work quickly to enact the proposal in order to resolve the school’s difficulties.
State Representative Earl Jaques, (D – 27th District, Glasgow) Chairman of the House Education Committee, said that a hearing on HB 100 is scheduled for Wednesday, April 29th.
Citizens concerned with various aspects of Sussex Tech HS and the STHS District, including the fact that property tax increases are not subject to approval by referendum (as they are in local school districts) and that school board officials for state created countywide vocational/technical school districts are appointed rather than elected, etc. should contact their state legislators to change the law accordingly as the question of school district taxation without representation remains unresolved.Furthermore, the entire situation raises fundamental questions regarding state centralization versus local control of education administration and policy-making.