County’s Biggest Business: School System With $416 Million Budget

Saturday, April 11, 2015 - by David Tulis

Even though the Hamilton County Department of Education is a separate entity from Hamilton County, it is a major financial drain on the county. With 6,265 employees and 42,837 students, the department of education’s operating budget for fiscal year 2014 was $416 million. 

County government paid 48.8 percent of the cost, or $203.16 million of the operating budget through property taxes, sales taxes, and use of fund balance. The state and federal dole provided $196.68 million; charges for services provided $11.75 million; and investments gave $4.49 million. (Comprehensive annual financial report, 2014, p. 8) 

The school system’s 2015 budget (different from operating budget) of F$399.17 million is 59.3 percent of the county’s budget. Its growth is 1.5 percent over fiscal year 2014. Basic education program funding from the state rose more 1.6 percent and is based mostly on student enrollment, which the bureaucracy expects to rise. Schools are a contract distribution station and jobs program. Eighty percent of the school budget goes for personnel. (p. xvii) 

Capital assets
The county’s net capital assets are $279.05 million and includes land, buildings, improvements other than buildings, machinery and equipment, infrastructure, intangibles and construction in progress. The county transferred $32.51 million in net assets to the Department of Education. For the year, the county’s investment in capital assets fell by $20.3 million or 6.8 percent. 

Simply for comparison, Chattanooga’s net worth is $2.42 billion in capital investment and a net position of governmental and business activities of $1.77 billion for a total of $4.19 billion, according to the city's comprehensive annual financial report (pp 27 and 34). 

Among 2014 Hamilton County outlays called “major capital asset events” are construction at Enterprise South Industrial Park – $808,391; school construction and renovations – $8.2 million;  Tennessee Riverwalk downtown segment Phase I and II – $683,242; and a homeless health clinic, $839,164 (p. xiv) 

Expansion of system
Rick Smith is seeking a tax increase to bring more cash flow into the county’s factory school system. He is holding public events around the county in which he plugs the idea of raising taxes 40 cents per F$100 assessed valuation of every property in the county. 

County Mayor Jim Coppinger points out how much has been spent already to subsidize the school industry run by the county. During the year the county has worked to build a $26 million Ganns Middle Valley Elementary School, a $12 million addition to Sale Creek Middle/High School, a $5 million addition to Nolan Elementary and a $5 million addition to Wolftever Elementary. A new East Brainerd Elementary is under construction and scheduled to open in August. As evidenced by these projects and the Stem school (science, tech, engineering and math), Mr. Coppinger says, “our commitment to advanced education is unwavering.” 

Mr. Coppinger speaks with some pride of outlays for schools that he calls investments.
“We have made all of these commitments without a tax increase,” Mr. Coppinger says. “Our conservative fiscal approach has allowed us to present a balanced budget during my tenure as mayor without ever having a conversation about increasing your taxes.” He says it is important to have “a low property tax for future residential and commercial investment.” He provides a rationale for commercial government: If taxes are to be kept low, government must engage in commerce to provide cash flow. “We will always work to promote growth to create revenue.” 

Schooling industrial complex at top 
The school system is the No. 1 county employer, with 4,480 people on board, or 2.4 percent of the employment base in the county.  

Behind it is Blue Cross Blue Shield of Tennessee, with 4,238 people. TVA is next, 4,126 souls, and Erlanger Health System, with 3,468. Volkswagen is No. 9, with 2,107, and Amazon.com has 1,966 at No. 10. These figures are from the  Chamber of Commerce. The county says elsewhere its staffing level for schools is considerably higher — 6,265 people. (p. 8) 

School employees enriched by TCRS
The county paid $14.5 million to Tennessee Consolidated Retirement System. In a rosy scenario, TCRS assumes a 7.5 percent per year gain with inflation guessed at 3 percent. (p. A-35) The education department put $7.75 million into health care benefits for 659 retirees. (p. A48). The Tennessee comprehensive retirement system is a state-owned and run capitalism machine with total assets of $47.5 billion. 

The school system is the largest sponge for funds created by county debt.  

The county has general obligation bonds outstanding of $238.3 million, and notes payable and other debt of $6.2 million. Of the bonded debt, $163.43 million was issued for the school capital improvements program.

(Source: Hamilton County comprehensive annual financial report, 2014, http://www.hamiltontn.gov/CAFR/)

 


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