While the Bulloch County Board of Education considers its 2025-2026 budget, staff members this week delivered news of a decrease in state funding to the schools, estimated at $6 million or more, triggered by a previous large increase in the value of taxable property in the county.

That boom in the local property tax digest resulted both from real growth from new construction and the high inflation seen in real estate prices in Bulloch County in 2023-2024. Now, the Georgia law enacted as House Bill 581 that effectively limits inflation in property tax assessments going forward to the rates seen in national Consumer Price Index stands to pull back about $1 million of growth in property tax revenue the Bulloch County Schools might otherwise have received this year, according to the estimates school system Chief Financial Officer Alison Boatright presented during Thursday night’s BOE work session.

However, with real growth in property, the allowed amount of inflation, Local Option Sales Tax and some payments in lieu of taxes expected from three new industries (AJIN Georgia, SECO Ecoplastic and Hanon Systems), local tax revenue to the school district is still expected to rise $4.15 million over the currently projected fiscal year 2025 total, to $56.99 million. That will be partly offset by a $1.12 million decrease in “other local sources” since the school district received two annual Medicaid settlement payments in fiscal 2025 and would not receive another in fiscal 2026, and also because of lower interest rates.

So, with no adjustment in tax rates, the school district’s total local revenues – both taxes and “other” – would increase by almost $3 million. But expenses have increased more, and local funding is less than half the picture. What Boatright reported next got board members’ attention.

“OK, state revenues,” she began. “This is the one that breaks my heart. We’re looking at a net decrease in state revenues of $5.9 million.”

This results both from a decrease in funding to Bulloch County Schools under the state’s Quality Basic Education, or QBE, formula resulting from an increase in required “Local Fair Share” and a larger reduction in the county’s Equalization Grant, which the state provides to school districts with poorer tax bases to equalize their per-student funding, at least part way, with that of wealthier districts.

Fair share rises

Preliminary notice of the decrease in QBE funding had arrived just Monday afternoon from the Georgia Department of Education, Boatright reported.

The fair share requirement is for 5 mills of local property tax funding, and the growth and inflation in Bulloch’s tax digest (the value of all taxable property in the county) raised the value of a mill here.

The state subtracts that required local share from QBE funding, so this resulted in a projected decrease of $2 million in what Bulloch County Schools will receive. Meanwhile, the school district’s Equalization Grant is projected to be cut by $5.9 million. This grant previously brought the school system almost $9.9 million in a year, but that is reportedly being reduced to about $4 million, “which is a huge decrease for us,” Boatright said. Considering trends in Bulloch County’s tax digest and student population, the grants could shrink further in coming years, but nobody really knows, said Superintendent of Schools Charles Wilson.

Boatright in her chart noted a partially offsetting $2.3 million QBE state funding “increase” targeted to higher costs of providing health insurance for certified staff, increased Teacher Retirement System contributions for state-funded positions, plus any program adjustments. But the bottom line was the $5.9 net decrease.

“Just to summarize,” said District 1 board member Lannie Lanier, “the increased property values in Bulloch County have caused us to be a higher-wealth system, by definition, which in turn has reduced our equalization funding. Is that a safe statement? So all this property growth is costing us $6 million.”

Boatright and Wilson agreed that this was essentially correct.

Or possibly – $10.5 M

However, Wilson noted that the $2.3 million state QBE increase for specific purposes consists largely of pass-through reimbursements for required spending increases. He cautioned the board that “cumulative” effects of the state funding loss could be much greater. In a brief interview after the work session, he noted that taking the pass-through amount out of the equation, the funding loss would be around $8.5 million.

Considered along with cost increases mostly beyond the board’s control, amounting to about $2 million, such as for health insurance cost increases not funded by the state, he and the board could be looking at a $10.5 million “hit” to school funding versus expenses, he said.

“The good thing is, for right now, is this is why we have positioned ourselves to have a healthy fund balance,” Wilson told the board. “It is going to significantly impact how healthy that fund balance stays.”

During the COVID-19 pandemic and its aftermath, the school system was able to shift certain expenditures to special federal grants, while maintaining local revenue, and accumulated a general fund balance of about $50 million. It should have about $37 million left at the end of the current fiscal year, June 30, according to Wilson and Boatright.

The board needs to approve its fiscal 2026 budget by July 1. Boatright’s current total general fund revenue projection is $149 million.

In a March work session, the board had heard about projected expenditures totaling $160 million.  Requested departmental funding increases totaled a little over $1 million. Wilson said the staff and board could be able to cut about half of those.

The information on state funding is not final, and the Bulloch Schools staff members said they will check again to see if there has been any mistake and wait for final numbers.

After Thursday’s session, Wilson said that unless something changes, the board’s long-term options would be obvious, to make significant spending cuts or increase revenue.  But with more than 80% of the general fund budget going to salaries and benefits, major spending cuts would mean a “reduction in force,” in other words cutting teaching jobs, and it’s too late to consider that this year, he said.

“Or – and I’m not saying that I’m proposing this or even going to entertain this – but of course there’s two sides to the story, you can do revenue, and where do you get revenues from? Either the state gives them to you or your tax collections go up locally. Tax collections go up locally by two things, the tax digest increases or you raise the millage rate. Again, I am not proposing that. I’m just stating the obvious,” Wilson said.

For now, he is suggesting that the board look at a multi-year approach and consider how much of the fund balance to use in a single year.

“I’ll listen to the board on how they might want to react, but if they ask my opinion, more than likely it’s going to be that we need to take an intentional and steady approach, not slow, but it needs to be intentional and steady,” Wilson said.

They are slated to discuss these things further, with updated information, during the May 8 board meeting.