In response to a delay in collecting Fulton County property taxes, a cash-strapped Atlanta Public Schools is considering furloughing teachers. While the Fulton County Schools spokeswoman initially said furloughs were not planned, I received a note today saying , "Everything is on the table as we get through this tax crisis. "
Fulton County is in a dispute with the state over its property assessments. And that has delayed the collection of property taxes, which are a major funding source for both school systems. About two-thirds of funding for APS and Fulton Schools derive from property taxes. And the districts build their mega budgets around the taxes, which is normally not a problem.
The tax bills are supposed to go out over the summer, but Fulton commissioners delayed the process this year after outraged property owners bombarded them with complaints over massive jumps in home values. About a quarter of homeowners saw assessments go up 50 percent or more, while half of the county's nearly 320,000 parcels saw assessments at least 20 percent higher.
In readjusting the assessments downward, the county has run afoul of the state Department of Revenue and thus the current stalemate that has held up tax collections. The state Department of Revenue's decision last week to stop Fulton County from sending our tax bills this month means no taxes are being collected and schools are without their life-blood funding. The state contends Fulton assessed properties below the fair market value and without basis.
On Friday, APS will be among the affected government divisions within Fulton County imploring a judge to order taxes to be collected after numerous delays.
As the AJC's Vanessa McCray reported:
Superintendent Meria Carstarphen on Monday gave the warning when she stressed the importance of a Friday court hearing in which APS, Fulton County Schools, and other tax-dependent entities have asked a judge to order taxes to be collected after numerous delays.
"I’m just being as direct as possible: This is so much bigger than the superintendent, the school board. We will be calling... anybody who is willing to listen if this goes south for us on Friday. Let me be clear, we have to furlough the entire staff because we will probably have maybe one more month to be able to pay our bills and our staff and then we’ll have to stop until something else happens which at the earliest would be January,” she said.
Here is what Fulton superintendent Jeff Rose told staff in an email:
THE PROBLEM: Earlier this summer, the Fulton County Commission decided to roll back a portion of the tax digest for reassessed residential properties to 2016 levels. Because of the initial delay caused by the decision of the Fulton County Commission, the Fulton County Tax Assessor had to recalculate property assessments, and property notices had to be resent, delaying the typical process by more than two months. This means that FCS is not receiving the expected revenue to fund our budget fully.
We did not know the extent of the delay in revenue until last week when the Georgia Department of Revenue did not approve Fulton County’s tax digest. We immediately worked to join Fulton County Government and Atlanta Public Schools in seeking legal relief to this situation through a Tax Collection Order (TCO). A judge will review the matter on Friday.
THE PRIORITY: When times are tough, we must prioritize. For the remainder of this calendar year, due to the financial constraint we have been put in, our focus will be:
The daily safety and security of our students
To do everything we can to honor our current employees with the compensation they deserve
THE PLAN: Our plan of action also includes necessary belt-tightening and cost-saving measures we will all take immediately to help improve our financial picture through January. They are as follows:
Move payroll date from December 20 to December 29, 2017 (Payroll will run on December 15)
Freeze hiring district-wide
Place moratorium on out-of-system travel, including conferences for staff and student field trips
Freeze spending, except items related to safety and security, federal compliance, and fuel and utilities.
We know that these measures come as many of you are making travel plans for student field trips, conferences and even holiday plans for your families. However, this is how serious our financial situation has become, despite our district’s effective managing of our financial resources.
As we receive information, we will continue to keep you updated.
Please take a look at the attached Q&A for more information! Also, feel free to contact us at email@example.com.
Thank you for all you do for Fulton County Schools and stay tuned.
Here is the letter that Atlanta Public Schools Superintendent Meria Carstarphen sent to her staff regarding the financial crisis caused by the Fulton County tax dispute.
As you may have heard in the media, there continue to be ongoing issues concerning the 2017 property tax assessments and its impact on APS. Earlier this summer, the Fulton County Commission voted to freeze a portion of the tax digest for reassessed residential properties at 2016 levels. Based on that decision, the district modified the FY2018 general fund operating budget to adjust our revenues to be $4 million less than what we had originally planned.
Also, because of the initial delay caused by the Fulton County Commission, the Fulton County Tax Assessor had to recalculate property assessments and resend property notices, delaying the typical process by more than two months. This delay made it necessary for the district to seek a $100 million Tax Anticipation Note (TAN) with a real cost of more than $470,000 in interest and fees. A Tax Anticipation Note (TAN) is a short-term loan issued to states or municipalities to finance current operations before tax revenues are received.
Recently, Atlanta Public Schools received an update regarding the 2017 property taxes from the Board of Commissioners of Fulton County. The County informed us that the Georgia Department of Revenue did not approve the submitted 2017 tax digest from Fulton County. We believe this action is based largely on the Fulton County Commission’s decision to arbitrarily undervalue residential properties within the digest, a decision the district has maintained was improper from the very beginning.
While we appreciate the Department of Revenue’s further review of the digest, the delay in approval has major implications for the district and other municipalities that are dependent on the timely collection of tax revenue for operations. APS, like other school districts in Georgia, is highly dependent on local tax collections, with about 62.5% of general fund revenue coming from the Fulton County Tax Digest. As our fiscal year runs from July to June, APS is four months into the year without receiving the revenue or cash payment from the Fulton County Tax Digest.
Over the next few days, you may hear that the district is taking legal action for the immediate and temporary collection of taxes for 2017. On Friday, October 26, 2017, Atlanta Public Schools and Fulton County Schools officially filed a request for the courts to intervene in this process to allow the district to collect property taxes.
In addition to taking this unprecedented step, we are also reviewing several other options to address short-term cash flow issues. For example, the district plans to take precautionary measures to slow down outgoing cash payments by modifying payment schedules for contracted services, goods and obligations as appropriate to minimize impact to daily operations. This means that we will delay payments for goods and services until right before the bill is due.
I am hopeful that we will hear positive news from the courts this week and that our operations will not be significantly impacted. In an abundance of caution, however, we are developing a contingency plan that could include implementing furlough days for some or all employees, delaying until January the $500 one-time payment for employees not on the teacher salary scale, and identifying ways to delay repayment of the district’s TAN in the event that we are unsuccessful in convincing the courts to intervene. The hearing date for the Temporary Collection Order is scheduled for Friday, November 3, 2017. We will provide additional updates as soon as possible after the scheduled hearing.