Q&A: All about the new schools and tax plan, non-resident student fee and more

The Madison City Schools superintendent, Robby Parker, has said for a year that the district will need more revenue to build multiple new schools.

The district said it needs:
$34 million for a new elementary school
$49 million for a new middle school
$18-20 million for high school additions
$3.5 million for additional operational support

Parker is proposing a 12-mil ad valorem tax increase for Madison residents. This would include Madison residents in Limestone County. Triana would also need to approve the tax increase.

Below is an updated FAQs (Frequently Asked Questions) from the Madison City School District on the new school and funding plan and the tuition proposal for out-of-district employees who want to bring their children to attend Madison City Schools.:

What does Parker’s Strategic
Plan call for including cost?
New elementary School ($34 million), new middle school ($49 million), high school additions ($18-$20 million), $3.5 million for additional operational support (SROs, counselors, teachers, utilities). Proceeds from the proposed ad valorem increase will also be used to repurpose West Madison Elementary into a district-wide PreK Center, incorporate a districtwide Performing Arts Center at the new middle school campus and complete several priority deferred maintenance projects.

Where will the money come from
and why is it needed?
Parker is proposing a 12-mil increase in ad valorem (property) tax which would add $254 per year of property taxes (or $21 per month) on the average home value in Madison of $211,800 (Zillow).
The growth rate MCS has been experiencing is unsustainable. We are reaching a critical point in capacity. Just from the end of the school year in May to the beginning of October, MCS has grown almost 430 students. That’s the enrollment at West Madison Elementary alone. Packing more students on existing campuses is not feasible because it would overtax lunchrooms, gyms, hallways and other school operations. Approximately 200 kids had to be turned away from PreK this year for lack of space.

How do we pay for it?
Finance construction with bond issues contingent on approval of a 12-mil property tax increase for voters to decide. A mil is a unit of measure (1/10 of a penny) used to calculate property tax based on its assessed value. A 12-mil hike would add $120 in property tax per $100,000 value of home, or $10 per month on the mortgage. For a $200,000 home, it would add $240 per year or a $20 monthly mortgage increase; a $250,000 home would see a $300 yearly increase ($25 per month); a $300,000 home would see a $360 yearly increase ($30 a month), and so forth. The actual financial impact would be less because property taxes are deductible on income tax.

What about the Limestone County tax case that included tax revenues for Madison City Schools?
That case was settled a year ago. The taxes that were in dispute involved countywide property taxes in Limestone County and a sales tax collected from Madison businesses in Limestone. The new 12-mil property tax being proposed would be a CITY school millage collected in Madison City in both counties and remitted totally to Madison City Schools.
The Limestone settlement was worked out equitably in 2017 with neither side getting everything it wanted. Background on the Limestone Tax Issue can be found under that heading on the MCS home page: www.madisoncity.k12.al.us. The 11-mil Madison City education tax was never an issue in that case and the 12-mil Madison City education tax won’t be either.
What’s Parker’s proposal for out-of-district tuition all about?

Madison City Schools allows employees who live outside the school district to enroll their children in MCS. The longstanding practice has required a student transfer request each year with one of the acceptance stipulations being on a space-available basis. Because of the district’s unprecedented growth in recent years and the fact he is going to the entire community with a tax increase proposal, Superintendent Parker is recommending a modest fee for these out-of-district students. The fee would be $360 a year (or $30 per month) available through payroll deduction. That cost is per household – not per child, and again, available only to out-of-district MCS employees who want to enroll their children in Madison schools.
Several of the top performing school districts that Madison compares itself don’t allow any out-of-district student. Parker said he wants to continue allowing children of out-of-district employees to attend Madison City Schools, and he feels that the $30 per month fee is not unreasonable.

Some out-of-district teachers have said they could support the fee with assurances their children can be guaranteed continued attendance at Madison City Schools. Is this an option?
Parker and the school board have consulted with Board counsel about a legal assurance. The Board attorney made it clear that they have no authority under Alabama law to do that. It would amount to a collective bargaining agreement, which is not legal in this case.

Parker has stated emphatically he has no desire to recommend a reversal of the policy which allows children of district employees to attend Madison City Schools. He will more easily be able to continue allowing this as long as capacity is not an issue.

The Strategic Plan calling for new schools assumes approval of the proposed increased tax revenue for Madison City Schools. What is the fallback if the 12 mils is not approved?
The superintendent and board believe the community will support approval of the tax revenue necessary for Madison City Schools to continue to offer a world class education for Madison students. Given the continued student population growth that will occur – even just on approved lots within current city limits – and the already existing stresses on the system’s resources, the current path is unsustainable with existing revenues.

The 12-mil proposal is what the superintendent, using Growth Impact Committee findings, feels is necessary to address future enrollment increases. If the proposed increase is not approved, continued enrollment growth could require extensive rezoning, split sessions, year-round school, worsening pupil-teacher ratios, significant program cuts and other actions that would jeopardize the quality of the educational product offered by Madison City Schools.

To do nothing would erode the quality of education in MCS, which would harm students, decrease home values, disrupt family schedules, deter employers from locating here, and force other major actions.

Why not just pay for schools out of your current budget?
The system is efficiently spending money on priorities, leaving virtually little or no room in the budget for cuts. Because Madison City Schools is a relatively new school system, the budget is still paying for a lot of schools. So our debt is high ($156 million) from multiple mortgages. Also, because the state funds schools in arears, the system has to absorb teacher growth units out-of-pocket each year and won’t recoup that until the following year. This is particularly burdensome on fast growing systems like MCS.

We are house poor and can’t borrow any new money until after 2030 and even then it would only support a $39 million bond issue.

What is the school system’s debt burden?
Of 137 public school districts, Madison City Schools ranks 23rd highest in debt-to-total expenditures, according to the finance division of the Alabama State Department of Education using 2016-17 figures. The state average is 5.37 percent of debt in relation to total expenses. Madison City is at 7.66 percent.

Looking at it from a debt-per-student standpoint, Madison City spends $715 per student annually toward debt compared to the state average of $515.

What does 1 mil net Madison City Schools per year and what would 12 mils allow you to borrow?
1 mil generates approximately $676,000 annually in the City of Madison, so 12 mils would bring in $8.1 million per year. That would authorize borrowing about $128 million for 30 years, depending on interest rates and other variables.

Are we really that strapped for funding in a community like Madison?
Madison City Schools ranks 82nd out of 137 public school districts in Alabama in per pupil spending, according to the Alabama Department of Education. The district’s $9,339 per student spending is below the state average of $9,671. The lowest per-pupil spending district is $8,140 and the highest is $13,141. Madison City Schools perpetually ranks poorly in pupil-teacher ratios because of its funding dilemma and is currently near the bottom (129th out of 137 school districts). Only one year in its 20-year history did MCS place better than 100th. All other years the district has endured high pupil-teacher ratios which won’t likely change without additional revenue to help pay for schools.

How can we be sure money from the 12-mil will go only to schools?
It will be clearly spelled out in the agreement with the City and in the legislation putting the property tax on the ballot. It will be a Madison City tax limited to use for public school purposes by Madison City Schools that may be expended solely by Madison City Schools.

When is the earliest date that 12-mils can be implemented and when would Madison City Schools begin to get the new revenue?
The short answer is a public vote by fall 2019, with construction starting in 2020.

Ad valorem proposals face a long approval process. Board of Education approval and formal request to the City are the first steps. Then a required public hearing by the City Council. Upon adoption of a resolution proposing the increase, legislation is then drafted and reviewed by legal counsel and by Alabama’s Legislative Reference Service. The measure then must be advertised four consecutive weeks in legal notices before being introduced during the legislative session. The Legislature doesn’t convene until March 2019. The property tax referendum must clear both chambers of the Legislature and be submitted to voters. Once approved by voters, the City Council may levy the additional mils of ad valorem tax for the specified purpose. Since property taxes are collected in arears, the earliest MCS could receive any money would be fall of 2020, assuming the referendum wins approval in the 2019 budget year. Voter passage of the additional millage of tax would enable the City to borrow the money to begin building, with initial payments on that debt to begin after the new property revenues are collected beginning October 2020.

Will the tax increase also apply to Triana and Limestone, and if so, will Madison City Schools get 100 percent of it?
The additional millage would apply throughout Madison’s city limits, including all parts of the City in Limestone County. The additional millage of city tax will be proposed for public school purposes so all of the proceeds will go to Madison City Schools.
An identical millage hike would be asked of Triana. Any increase in Triana city tax for school purposes must be approved by Triana voters in the same manner applicable to the proposed increase in Madison.

Triana’s attendance agreement with Madison, approved at the time Madison’s school system was created, includes provisions for Triana to match any increase approved in Madison within one year. Discussions are already underway with Triana regarding consideration and approval of an identical 12-mil referendum in Triana exclusively for public school purposes. As long as the attendance agreement with Triana remains in place, all proceeds from such increase in Triana must go to Madison City Schools. We believe that Triana will be supportive of continuing its successful partnership with Madison City Schools.

The Strategic Plan presentation suggests our high student-teacher ratios are due largely to funding deficits resulting from growth. Why is this?
The state funds school systems in arrears. In other words, Madison City gets its per-pupil allocations from the Alabama Department of Education based on its previous year enrollment. MCS has grown by more than 420 students since the end of the previous school year. That’s additional teaching units and other expenses MCS must absorb out of local funds until the funding catches up. This budget formula is burdensome for fast growing systems. The lag in this year’s budget, for example, requires Madison City Schools to cover $3 million from growth impact that will not be covered until next year’s state funding allocations.

Why are our per-pupil revenues so low compared to other Alabama public schools?
Per-pupil revenue rankings are from several factors including the amount of local tax support, and the percent of students living at or below poverty which qualifies the district for additional federal money. Madison City Schools is “house poor” in that its exceedingly rapid growth has required it to borrow to build new schools faster than growth in revenue can occur. Consequently, MCS has disproportionately more of its money committed to paying for schools.

Madison residents also pay far less in local education property taxes than other top performing school districts in Alabama. Here are the education millages in the top 5 school districts according to NICHE: (Mountain Brook, 52.9 mils; Madison City, 27; Homewood City, 37.5; Hoover City, 46.1; Vestavia Hills, 52.05).

Although Madison residents enjoy a top ranked school system while paying only 27 mils of tax for education, the school system simply cannot continue to compete with those collecting almost as much as twice in local support for education when MCS is saddled with so much demand for new capital construction.

If a third high school could be needed within 10 years, why not go ahead and ask for more property tax millage now to cover it? The Strategic Plan said a third high school would require the addition of 8 mils to the 12 mils being proposed.
Superintendent Parker said the district is only asking for what will solve the immediate, known need. There are 2,000 residential lots ready for development with other undeveloped land having the potential to be developed in Madison City. Parker said the new elementary and middle schools are urgent under growth that is certain and if funding is not available for a new high school when needed 5-7 years later, additions to the existing high schools will be adequate for up to a City population of 65,000. The school district has no control over annexations or the pace of growth. That is a function of the City of Madison.