The financial fates of the Atlanta and Fulton County school districts hinge on the outcome of a Friday court hearing.
The school districts and governments that depend on Fulton County’s property tax collection warned there could be employee furloughs and even terminations if a judge does not allow them to collect taxes soon.
Asked how crucial that decision is, Fulton County Schools Superintendent Jeff Rose offered a stark reply.
“I guess you’d say, ‘How important is school?” he said. “It makes a dramatic difference in our ability to either limp along… (or) potentially not being able to limp along.”
The district on Tuesday announced a hiring freeze, spending cuts, and field trip moratoriums as it awaits tax money.
Fulton schools will move a Dec. 20 payday to Dec. 29. A spokeswoman initially said the district does not plan furloughs but later said all options are on the table.
Atlanta Public Schools sounded the alarm this week that furloughs — forced days off without pay — for “some or all” employees could be coming if revenue doesn’t flow soon.
And Fulton County government could terminate positions and impose furloughs.
The crisis comes because the state Department of Revenue rejected Fulton’s tax digest, which meant the county could not send its already delayed tax bills. Fulton County commissioners froze most property values at 2016 levels after homeowners complained of huge increases in their homes’ assessed value. This delayed the tax bills for several months while they were recalculated. Then the state rejected the tax digest — an accounting of all personal property and real estate — because it says the county’s assessments were far below fair market value.
“We will be calling … anybody who is willing to listen if this goes south for us on Friday,” Atlanta School Superintendent Meria Carstarphen told several dozen people in a community meeting Monday. “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.”
The budget uncertainty has taken its toll on some educators, who are “flat-out tired” and battling low morale, said Verdaillia Turner, president of the Atlanta Federation of Teachers.
While Atlanta school board member and budget commission chairman Jason Esteves said APS will only use furloughs as one of the “last options,” Turner said the district should not cut into classroom time. “They can tighten their own belts, not on the back of the teachers, though, or the students,” she said.
Adding to the financial pressure for APS is the looming repayment by the end of December of a $100 million loan, which will cost the district about $470,000 in fees and interest, that it took out to cover expenses during the revenue delay.
APS initially intended to give all employees raises but scaled back after the property value freeze lowered projected revenue by $4 million. Teachers still received raises. But the tax collection delays could mean other employees will have to wait until January for a $500 payment they were promised in lieu of a raise.
Rose said spending cuts and a hiring freeze won’t be enough to get the district through the year if it can’t begin collecting taxes. He said the district is living off $295 million left over from the previous budget year — a sum that goes fast when monthly expenses add up to about $85 million.
Fulton County elementary teacher Lashanda Nelson said the furloughs she took during the economic recession at another local district made it hard to pay her bills, so she’s happy Fulton schools haven’t yet announced days off or job cuts.
She plans to finish her Christmas shopping early in preparation for the later-than-expected December paycheck.
“Even if this is resolved and there isn’t an individual financial impact,” said Craig Harper, spokesman for the Professional Association of Georgia Educators, in a written statement, “in the meantime there’s a serious human and student impact as educators and school leaders are stressed and distracted from their work with students.”
For Fulton County, jobs are on the line. In an affidavit to the court sent last week, Finance Director Hakeem Oshikoya said the delay sending bills could cause the county “to terminate positions, furlough employees, and provide fewer employee benefits.”
He said without an “immediate solution” the county will not be able to pay its debts and could default on $200 million worth of bonds, including those that are being used to build and renovate libraries. The interest on those bonds is $1.5 million.
Fulton also runs the risk of defaulting on a $200 million loan that must be paid by the end of the year. If it does, Oshikoya said, the county’s credit rating “will suffer immeasurably.”
The county has already spent $160 million more than it has taken in, with the expectation that it could pay off those debts with property tax money.
DeKalb County Judge Alan C. Harvey will preside over Friday’s hearing because Fulton County judges recused themselves.
The county asked the judge to shorten the timeline for tax collection in Fulton County to 45 days, the same as Atlanta’s. Residents of Fulton outside Atlanta usually have 60 days. County leaders say they would not charge interest in Fulton County until day 61.
Fulton County Commission Vice Chairman Bob Ellis said in an emailed statement that he is “united” with the school districts and other local officials in seeking the temporary collection order. “Our filings and those of other local governments spell out how critical and imperative this is for all Fulton County citizens,” he said.
Carstarphen pointed her finger back at Fulton County commissioners.
“It’s a very serious situation. And let me tell you, if you want to get really informed and do something in this election season, learn about those county commissioners because they are the ones making the decisions about this tax situation that’s putting us all in a very tight spot,” she said.