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Local entities meet to discuss school budget crisis

Should the local sales tax be raised? Should the mill levy increase?

These questions, and more, were raised last week at a public forum/work session held by the Archuleta School District 50 Joint board in an attempt to solicit ideas on how to address an impending budget crisis faced by the district.

Playing to a packed room filled with area parents, residents and school staff, the board had members of the Pagosa Springs Town Council, the Archuleta Board of County Commissioners, and representatives of the Pagosa Area Water and Sanitation District, Upper San Juan Health Service District and Pagosa Fire Protection District at the table, in a show of community involvement and concern with the district’s financial plight.

Unfortunately (and, perhaps, due to an oversight), the newly-formed Pagosa Community Development Corporation was absent in the discussion.

District Superintendent Mark DeVoti introduced the forum by explaining the bind the district is facing — $1.35 million in state cuts during the 2010-2011 school year (an almost 10 percent cut — see related story) with possibly an additional $1 million in cuts the following year.

However, it was board president Linda Lattin who cut to the chase saying, “Where we’ve taken this is a possible sales tax, a possible mill levy (increase).”

In making her case for a sales tax increase, Lattin referred to Steamboat Springs, a home-rule municipality, which increased its sales tax a half-cent in 1993 for the express purposes of raising money for local schools. Like Steamboat Springs, Pagosa Springs is a home-rule municipality and can raise taxes free of TABOR (Tax Payer Bill of Rights) restrictions. Steamboat Springs voters approved a 2008 referendum to recertify the tax through 2019, raising about $3 million a year for their schools.

According to DeVoti, a similar tax in Pagosa Springs would raise an estimated $750,000 annually for the district. DeVoti also said that a two mill increase on property taxes — about $32 a year per property owner — would raise an additional estimated $850,000, with the combination of the two sufficient enough to cover budget shortfalls that could reach as much as $2.5 million of the next two years.

“If we could do something and combine resources, quite literally,” said board director Ken Fox, “we could get through this.”

“The issue is,” added director Bill Nobles, “we’re probably going to get through this one. Our problem is, we’re probably going to take another ten percent (budget reduction) next year.”

While the district had presented a proposed $1.3 million in budget cuts for the 2010-2011 school year (about $189,000 shy of its 10-percent reduction target), unpopular ideas such as closing the intermediate school or embracing a four-day school week were left out of the equation. However, according to Nobles and the rest of the board, another unmitigated 10-percent reduction in the following year would necessitate all of those measures.

“We will affect each and every one of you,” said director Joanne Irons, referring to the effects of a decrease in education quality on potential economic development.

In fact, numerous comments from the audience supported Irons, most contending that it would be difficult to attract new businesses to the area with the prospect of substandard schools faced with undue budget constraints and lopsided student-to-teacher ratios.

“The biggest reason people are coming here and staying here,” said local resident Jerry Smith, “even second homeowners, are quality schools.”

“Reducing teachers and increasing class-size is counterproductive to economic development,” added Parelli CEO Mark Weiler.

However, town council member Jerry Jackson was not certain that raising taxes was a solution to the district’s crisis. “Money isn’t always the solution,” he said. “I would encourage you to bring in some of the student leaders and get their opinion,” adding that the town had responded to its own budget crisis with deep cuts.

Indeed, while the town had in fact responded to its own crisis with a 15-percent budget reduction, in response to an almost 9-percent decrease in sales tax revenues during 2009, most of those cuts came at the expense of proposed capital improvements, with very little savings realized from staff salary cuts. Furthermore, the town had saved well over $100,000 through attrition (by not hiring a planner or associate planner). Finally, while the town had reversed a 2008 $1.4 million spending deficit through instituting the above measures (building general reserves to almost $1.7 million), the school district has not operated in the red during the past five years.

Whether Jackson’s point was taken to heart or not, it was an apples-and-oranges comparison. Similarly, a comparison with the county (and its fiscal crisis) would likewise be errant as the county partially answered its dilemma with a substantial reduction in force — approximately 20 percent of county staff via layoffs and attrition in response to a multimillion dollar dilemma.

Yet, while financial turmoil on the part of the town and the county were the result of mismanagement, the district’s problems are due to the state’s diminished revenue stream compounded by a constitutional amendment mandating a balanced budget.

“This is not our doing,” said Irons, “This is statewide.”

In fact, education funding in Colorado has fallen to the wayside for more than a decade. Nationwide, Colorado ranks 48th in school funding, 49th in graduation rates, and 28th in achievement scores. However, areas of Denver and Boulder (among the highest funded districts in the nation) skew statewide results in student achievement; when those counties are removed from the equation, Colorado drops within the lowest quartile in student generic achievement scores. Conversely, the top ten states in school funding are also the top ten states in overall achievement scores.

As Smith pointed out, Archuleta County residents are paying less in mill levies than they were a year ago and those mill levies would continue to fall along with tax valuations. While county residents have felt the squeeze of increased property taxes (relative to decreased property values due to a state-mandated formula putting valuations three years behind), Archuleta County gets less bang for its buck.

Part of the problem is wild land speculation and rampant home sales between 2005 and 2007 that led to high property values; as those property values plummeted after the crash in late 2007, valuations (and subsequent taxes) would remain at levels determined from previous years — and not expected to meet more recent market values until 2011 valuations.

Another problem is affluent landowners in the county who skew average land values away from the county’s real median income. Thus, while another county which has less than 5 percent of students on free and reduced lunches might hand $12 million to the state in property taxes and get $6 million back for the school district, Archuleta County (with about 52 percent of its students qualifying for free and reduced lunches) hands the same amount over to the state in property taxes to get less than $4 million in return for the lcoal school district. Due to a combination of inflated property values and state equalization funding (the Archuleta County school district has seen a drop in student population over the past four years), the county gets far less than it puts in as far as state funding.

Asking how much current budget cuts affect the district, local resident Teddy Herzog asked, “How much pain is this?”

“It’s a lot of pain,” DeVoti answered. “It’s not good for anyone. It’s good to us as a financial crisis, it’s an opportunity, it makes us more efficient…”

However, DeVoti added, “It hurts the kids, it hurts all of us; it hurts employees, it hurts the town … it’s not good.”

As far as cooperation regarding the crisis, the PFPD committed to not pursuing their own request in a raise in the mill levy while PAWSD remained noticeably silent. However, Pagosa Springs Mayor Ross Aragon said, “I’m sold that we have a crisis … and I’m aware that we can’t be a progressive community without good education.” Aragon promised that he would bring the matter before council.

Speaking for the county, BoCC Chair Clifford Lucero said, “Likewise, we’ll try to come back with some ideas.”

What those ideas might be remains to be seen. Although it seems questionable whether an increase in the mill levy would pass in a depressed economic environment and another year of inflated property valuations, waiting another year to present the proposal wouldn’t mitigate the district’s immediate crisis. Likewise, faced with questionable sales tax receipts over the next year, a proposal to raise the local sales tax for dedicated funds to the school district seems a far-flung dream from a council that has no investment in local schools (neither the mayor, nor any council member, has any children attending local schools) especially as it would limit a potential revenue stream for the town, if needed.

While the district is about to make its cuts for this year, most of the future is reliant on how the town and county responds to the crisis: those entities could accept the district’s pleas, offer solutions — or do nothing. As such, a community could come together, as it did last Thursday night, and work out a solution, both for the schools and for the future of economic development in Pagosa Country.

Unfortunately, the alternative, of course, also determines the future of our community.