Funding Our Future
It's no secret that our nation is in financial dire straits, and many Americans are holding our breath, wondering what tomorrow will bring. South Carolina is facing a similar financial crisis. The state's tax structure, once revered for its efficiency, has recently faced problems due to a shrinking tax base and a greater reliance on fluctuating revenue sources. There isn't a day that goes by that we don't hear about the massive budget cuts to our public education system. It's a scary prospect — we are financially undermining the very institutions responsible for educating and training our children for the world and workplace of tomorrow. As South Carolinians, we are wondering, "What is the REAL bottom-line of these budget cuts and how can our local school districts offset these deficits?" Though the financial outlook is grim, our educational institutions are committed to student success and the training of a future workforce that will lead Greenville County into the next era.
THE LEGISLATION THAT IMPACTED SCHOOL FUNDING
In order to best understand our current state of K-12 financing, we must first fully understand the legislation and actions that have shaped our tax revenue structure from past to present. Craig Stine, research director at Public Education Partners, noted these transformative statutes as presented in Dr. Michael Fanning's presentation "Is Our State Broke?...Or Is Our System Broke?"
•Act 388 eliminated the use of property taxes from owner-occupied homes for school operation and replaced this source with a one-cent sales tax increase. When the economy fell and the economy-dependent sales tax revenue decreased, the total revenue was not sufficient to compensate for the lost property tax revenue. The tax burden, though lifted from owner-occupied homes, was maintained for commercial and industrial properties. The deficit seen in 2010 totaled $126 million.
•There are more than 80 state sales tax exemptions that, every year, cause the state to exempt around $2.7 billion while only collecting $2.2 billion.
•South Carolina has a comparatively low cap on vehicle sales tax. Whether a consumer buys a compact car, a luxury SUV or a yacht, the sales tax is a flat $300. This is strikingly low compared to North Carolina and Georgia.
•As our state economy becomes increasingly centered around services instead of goods, we still only tax approximately 20 percent of services. Pet grooming, landscaping and investment counseling are just a few examples of non-taxed services.
•South Carolina has no direct tax on internet sales, losing in excess of $110 million per year. This practice can seriously disadvantage local businesses.
CURRENT STATE OF K-12 FUNDING IN GREENVILLE COUNTY SCHOOLS
In FY07, local revenue made up 42 percent of the district's general fund while state revenue funded 58 percent. In FY08, the first year of Act 388, local revenue funded 31 percent while state revenue funded 69 percent due to the increased sales tax rate from 5 percent to 6 percent. From FY08 to FY11, there has been an 8.5 percent increase in local revenue and a 13.7 percent decrease in state revenue for the general fund.
According to Dr. Phinnize Fisher, superintendent of Greenville County Schools, since FY08, the district's operational mills increased by 8 mills (7.3 percent) as allowed by state law. She says, "In FY10, we could have increased the mills by 7.1, but the board, working with the administration, chose no increase because we knew that businesses were also suffering."
Dr. Fisher says that throughout the recession, the district's most stable source of general fund revenue continues to be local revenue, with 99 percent of this from property tax. The SC State Department of Education Office of Finance on December 17, 2010, informed the district of a decrease for FY11 in the Education Finance Act (EFA) Base Student Cost (BSC) from $1,630 to $1,616. "This is the largest source of state revenue for our general fund, providing 26 percent of total monies. This action clearly illustrates that our current funding, at least at the state level, is not as stable as we'd like," says Dr. Fisher. "The BSC of $1,616 reverts to 1996 funding levels, and comparatively since that time, we have grown by 26 percent or 14,600 students."
The budget shortfalls have been felt throughout Greenville County Schools. From FY09-11, no new instructional programs have been initiated and no current programs have been expanded. The student-teacher ratio has been increased by 1.5 students. The FY11 general fund reflects the reduction of 167.9 positions, including 36.4 district personnel, 107.8 teachers and science instructors, 10 aides and 13.7 school support personnel. Dr. Fisher notes that over the past two years, the district has not been able to fund the School Computer Refresh Program, impacting six to eight schools per year. Supplemental days for guidance counselors were reduced from 65 to 30 days per school year. Department budgets were cut $4.4 million and general supply budgets for schools and departments were reduced 36 percent over a two-year period.
Greenville County schools are also finding ways to "compensate" for budget cuts through some non-traditional ways including energy-saving measures and mandated vacations. "Central office personnel generally work year-round, but now we have mandated vacation time for Christmas, spring break and weeks over the summer," says Dr. Fisher. "We have realized a savings of $50,000 a day in energy costs when facilities are shut down."
Brett Pyle, chairman of Langston Charter Middle, says his school is funded mostly through the state with some local match funds. Currently, charter schools receive about $4,500 per student per year but Pyle is optimistic. "Langston has a proven five-year track record and our student population has grown from 100 to 400 students during that time. We've demonstrated we can produce results even with such a low level of funding, but we must be ever-mindful of delivering excellence while increasing efficiency."
In 2009, the state legislature established the South Carolina Taxation Realignment Commission (TRAC) as an independent body charged with reviewing the state tax system and recommending change. Of important note, Act 388 was excluded from review.
According to the "Final Report of the SC Taxation Realignment Commission" released December 10, 2010, the state's current tax structure is "significantly hindered by structural deficiencies that if not addressed will continue to negatively impact the state's ability to produce a system that is fair in its treatment of all taxpayers and not just an increasingly few."
THE FUTURE OF K-12 FUNDING
"The funding outlook is still very bleak," says Dr. Fisher. "During FY10, we were allocated $19.3 million from the federally-funded State Fiscal Stimulus Funds (SFSF) and $15.8 million in FY11. We have used these funds to pay our utility bills, but the funding ends this year. There is also the possibility of reductions in state allocations such as the EFA."
"South Carolina is one of only two states in the nation not receiving stimulus funds going forward," says Stine. "Our state is $110 million short in funding allocations for higher education so we are ineligible to receive the $143 million this year to supplement our K-12 educational needs."
In an editorial named "Time to Find Education Funding Is Now," Senator Ralph Anderson from Greenville District 7 has proposed an alcohol tax as a means of raising K-12 funding. His plan was inspired by the General Assembly's recent override of the Governor's veto of a 50-cent cigarette tax increase, which will be used to generate revenue for healthcare costs.
"Our state's ability to raise the cigarette tax provided a blueprint for a successful campaign to increase taxes on alcohol sales," says Anderson. "We need to aggressively explore other options to increase revenue for education, and that is why I'm proposing the state increase its tax on alcoholic beverages to fund education."
Under Anderson's plan, all funding generated will be specifically designated to education and putting more teachers in the classroom, continuing to increase the quality of education by reducing class size.
Anderson is currently seeking to form a coalition of communities, religious and educational leaders along with business officials to give the proposal life and advancement. "The time to act is now. It is our moral obligation to collectively come together and make significant changes in our state, which will afford each and every child the opportunity to receive a proper education."
Going forward, Dr. Fisher says Greenville County schools will make informed, thoroughly contemplated decisions that will further the district's goal of ensuring student achievement. "Maintaining a fund balance within the Government Finance Officers Association (GFOA) recommended range has provided the district the ability to take measured approaches to the cuts instead of being forced to make hasty decisions. We do not anticipate any material increases in state funding until the latter part of FY13. The budgets will continue to be developed with Goal One (Raise the Academic Challenge and Performance of Each Student) as the priority." She also notes that, currently, 78 percent of the general fund budget is allotted to instructional services and support, up from 72 percent in FY09.
K-12 EDUCATION AND THE GREENVILLE BUSINESS COMMUNITY
Though educational funding has taken a hit, it has remained exceedingly important for K-12 to maintain its mutually beneficial relationship with the business community. Local businesses provide critical hands-on collaboration and a stable tax base to support area schools while Greenville County schools, charter schools and other educational resources are working diligently to train and prepare the workforce of tomorrow.
"There are approximately 70,000 students in Greenville County schools, and many of these will comprise the bulk of the county's future workforce," says Stine.
"We mustn't let budget cuts bind our hands educationally but strive to ensure our students receive the best education possible in order to secure industry with high-paying jobs."
Charter schools are forging ahead with the same mission. "At Langston, we strive to be a well-honed, educational institution capable of producing a pool of productive employees for the area," says Pyle. "We focus on blending core academics with leadership training and community service."
Dr. Fisher touts the importance of local business participation with district schools, specifically noting Institutional Resources, LLC, an alliance of local businesspeople coming together to fulfill a need for new and renovated facilities in Greenville County. "It was impossible to meet the continuous demand for new technology in our schools, and at best we were only completing two or three schools per year," says Dr. Fisher. "Institutional Resources stepped in, completing 70 new schools within five years without raising taxes."
She also notes the commitment of local business to come in to the district and allow students to participate in critical thinking activities or shadowing opportunities, giving them invaluable first-hand exposure to industry.
"Businesses across the Upstate have really opened their arms and facilities to our students, helping them to understand why they are learning certain skills and how they can put these into action," says Dr. Fisher. "Greenville County schools are focusing today on the rigor of our education and its relevance to industry. We are committed to science, technology, math and engineering curriculums, developing abilities now for jobs that may not even exist yet. Preparation is key so students will be successfully able to step into these new positions as they arise."
Perhaps one of the strongest connections between K-12 and the local business community being forged is through the Greenville Chamber's Carolina First Centers for Excellence (CFCE) program. What was founded as a pilot program in 2001 is now in partnership with 46 schools in the Upstate — 40 of them in Greenville County — reaching 1700-1800 teachers and around 18,000 students bringing the principles of quality, goal setting, continuous improvement and lean into the hands of teachers and students.
"Education and workforce development are key factors to successful economic development," says Michele Brinn, Greenville Chamber's vice president of Workforce and Education and director of CFCE. "If we are to remain competitive, students today must be not only literate and numerate; they must also be creative problem solvers, learn to take responsibility for achieving goals, and be proficient in the processes that today's workplace demands."
In order to set a pace for continuous improvement, the CFCE training has adopted the best from organizational developmental theories such as Baldrige, Deming and Six Sigma. The CFCE mindset plays into the innate drive in humans to achieve an "all-time best," and the scope of the project is to enable students to create goals, understand the work required and become fully engaged in attaining those goals. Teachers are trained to establish and provide instruction in this type of learning environment where everyone becomes a part of the process.
"Teachers are working in unison with students to determine 'What are the deltas? What works? What needs improvements?'" says Brinn. "The students are building problem-solving skills to carry through a lifetime, equipped to meet the needs for the workforce of tomorrow. This partnership costs schools virtually nothing to implement. The Chamber and other supporters of the Carolina First Center for Excellence are proud to partner with the education community."
Likewise, Public Education Partners, in business for 25 years, collaborates with the community, educators and elected officials to strengthen and support public education and student achievement in Greenville County schools. They are working to increase quality in teaching in collaboration with the district and are supported by large businesses in the area.
Michelin North America is just one example of local business lending valuable support to area schools. In August 2010, Michelin sponsored a major fundraiser program "Are You Smarter than a Greenville County Fifth-Grader?" that sought to raise funds to offset those lost by the district over the previous two years. The event was a success, raising $175,000 for Greenville County schools.
"A community truly thrives when all entities come together, including education and business," says Dr. Fisher. "We in K-12 understand our responsibility to instill in our students academic achievement, character development and a variety of skills from arts to athletics — we are developing the future workforce. I believe the business community will continue to support us."