BCSC has a structural deficit due to a reduction in state funding. Solutions are budget reductions, or a revenue increase through local property taxes.
The school board is placing a referendum on the ballot now because the Benton Community School Corporation (BCSC) this year faces a $2 million structural budget deficit, which is about 13 percent of the corporation’s $15 million education fund. There are several factors that led to the deficit, but the two most important are that state aid has failed to keep pace with inflation-based costs and that a trend of declining enrollment in our schools has meant a further decline in revenue from the state.
About the education fund
This fund covers salaries and benefits for teachers, support staff and office personnel. It also covers technology, equipment and instructional software. A deficit of this size is not sustainable. The options are to reduce the budget, increase revenue, or some combination of the two. Neither small program cuts nor cost efficiencies will resolve the matter, and Indiana school finance law offers school corporations very few choices of ways to increase revenue.
Why wasn't this addressed sooner?
Some community members have expressed surprise and asked why the corporation did not address these issues earlier. One key answer is that a clear downward enrollment trend emerged only in the past couple of years. Until about three years ago, BCSC had experienced fluctuating enrollment over the past decade or so - typically a year or two of enrollment increases followed by a year or two of decreases and then small increases again. So, enrollment declines in the 2016-17 school year and again in 2017-2018 did not necessarily signal a new trend. But when enrollment declined for a third straight year in 2018-2019, the corporation recognized it as a warning sign and began serious discussions about the implications. Now, a shrinking Benton County population and a clear trend of smaller class sizes in the lower grades compared to high school suggests that enrollment probably will continue to decline into the next few years at least. This matters because Indiana state aid to schools is linked directly to enrollment numbers.
State funding doesn't keep pace with inflation
In addition, school-funding changes that state legislators made in 2009 continue to have a slow but negative and cumulative effect on the financial picture for many corporations, including BCSC. That’s the year that legislators eliminated local property taxes as a source of revenue for school districts’ education fund and instead, made state-generated revenue the source of money for education funds across the state. The change had an immediate negative effect on BCSC finances, and we responded by enacting a series of spending cuts to address the immediate impact. Over time, however, state funding simply has not kept pace with most school districts’ inflation-based expenses. That, coupled with the enrollment decline, means the time has arrived for BCSC to address the issue.