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Park City School District is tightening its belt

Frank Fisher, Of the Record staff

Utah school districts get most of their funding from property taxes, so one would assume that the Park City School District which contains some of the highest property values in the state, should be in great financial shape. But the results of a recent audit report confirmed plummeting reserves and have sent local school district officials scrambling to trim expenses.

The Park City School District is spending more money than it is taking in, according to acting district superintendent, Tom Van Gorder.

An independent auditor, Ray Bartholomew, raised the red flag at a board of education meeting on Nov. 7. He warned board members that a district of their size should maintain a reserve account of $5 million. The PCSD’s reserve account however will be drained down to about $300,000 after renewal of the contract with licensed and classified employees.

In response, the district has assembled a budget committee to look at ways to save money.

Summit County Auditor Blake Frazier explains that while property values have been steadily increasing in Park City, the amount the district collects has not gone up at the same pace. School districts are obligated to lower tax rates to offset potential windfalls from increasing property values to keep tax rates the same. As a result, Frazier says, property taxes in Park City are actually among the lowest in the state.

Without holding a series of Truth in Taxation hearings, revenues collected by the Park City School District from property taxes must remain the same from year to year, excluding taxes generated by new growth.

New construction, however, generates new property tax revenues. But, in general, Frazier says, residential growth does not pay its own way. New homeowners generally have kids, so the new tax revenues are needed to cover increasing enrollment in the schools.

"If all you had was a residential society, taxes would not pay for the services the homeowners would require," Frazier said adding that, in Summit County primary residence owners pay taxes on only 55 percent of the appraised value of their homes while commercial property and second-home owners are taxed on 100 percent of the appraised value of the property.

School district budgets are further complicated by the fact that the budget is separated into two main categories and one cannot bail out the other. They are the capital budget, used for building and maintenance, and the operating budget that covers salaries and school supplies. In Park City, both sides of the school district budget have been hit with higher expenditures.

The school board has limited options. It is limited by the amount taxes can be raised. The other alternative is to make major cuts in the school operating expenses.

The board has the ability to raise the tax rate every August through Truth-in-Taxation hearings. But the rate can only be raised to the maximum level established years ago in a Voted Leeway hearing. That rate is already nearly at its maximum.

A substantial increase in revenues from property taxes will come only if the State legislature raises the basic tax levies across the State.

Tough decisions face the Park City school District budget committee, and the school district may have few options to keep existing services in their present state.


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