Bill seeks to correct Sussex Tech financial, enrollment Issues

DOVER – State lawmakers planned to introduce Thursday a bill to repair financial and enrollment issues threatening the sound operation of Sussex County’s largest high school.

POST SUSSEX TECH bill to repairl

State lawmakers on Thursday planned to introduce a bill to repair financial and enrollment issues threatening the sound operation of Sussex Tech – Sussex County’s largest high school.

 

Four years ago, the leaders of Sussex Technical High School began a dramatic increase in the school’s enrollment.  The student body jumped from 1,295 in Fiscal Year 2011 to 1,545 today.

Meanwhile, the growth of the school’s tax base – Sussex County property evaluations – slowed dramatically and failed to support Sussex Tech’s aggressive expansion.  According to a report issued in late 2013 by the Sussex Tech Tax Rate Review Committee, annual growth of the county’s property valuations dropped from 7.7 percent in 2006 (the highest rate in more than 20 years) to an annual average of less than 1.6 percent from 2010 through 2013.

The amalgam of higher expenses and slack revenue growth led to a sharp decline in the school’s cash reserves as administrators tapped the surplus to balance the books.  In FY 2011, Sussex Tech had $5.17 million in unencumbered cash.  By the end of the current budgetary cycle on June 30th that reserve is expected to be less than $1.25 million.

Sussex Tech’s expansion came on the heels of 19 percent property tax hike phased-in over three years*, culminating in FY 2010 with a new rate of 23.5 cents per $100 of assessed value – the highest levy allowed by law.

“The numbers speak for themselves,” said Speaker of the House Pete Schwartzkopf, D-Rehoboth Beach.  “The flagging economy, combined with the overly optimistic decisions made by Tech’s leadership, created a financial imbalance, requiring them to burn through about $1 million in reserve cash annually over the last four years.  That is not sustainable and it needs to be fixed.  Our bill will do that.”

Sussex Tech officials’ vision was for the school to serve 20 percent of the county’s high school-age students by 2020.  Based on population and demographic projections, meeting that goal would have raised the student population to 2,120.

“The school’s leadership was pursuing a goal of their own making,” said State House Minority Leader Danny Short, R-Seaford.  “There was no directive from the state.  There was no plan approved by county residents.  Sussex Tech officials set out on their own quest for their own reasons.  They pressed ahead, even when the financial implications of their decisions made it clear they needed to take their foot off the gas.”

District officials responded to the school’s growing fiscal disparity by pressing the General Assembly for authority to hike taxes again.  This time, Sussex Tech wanted an increase of more than 114 percent over six years, topping out at a new rate of 50.5 cents per $100 of assessed value.

Additionally, according a recent report commissioned by House Concurrent Resolution 2, Sussex Tech’s growth would have required the construction of new facilities costing between $280 million and $316 million.  Under a plan on file with the Department of Education, Sussex County property owners would have been saddled with additional tax hikes to finance the local share of the project, estimated to be $112 million to $126 million.

The consensus legislation being filed in the State House of Representatives today seeks to restructure the school’s finances and enrollment, giving the district’s leaders time to make further needed adjustments.

The measure will grant the district a 5.5 cent tax increase beginning July 1st.  The following year (FY 2017), the district will get an additional one cent bump, raising the overall rate to 30 cents per $100 of assessed value.  The tax hike will cost the average homeowner $8.86 in the first year, rising to $10.47 the following year.

The property tax increases would then disappear July 1, 2017 (FY 2018), with the rate resetting to the current 23.5 cents.

The legislation also proposes reversing course on enrollment.  It would reduce the student population by 295 over the course of the next three academic years, cutting 100 students in 2015-16; 100 students in 2016-2017; and 95 students in 2017-2018.

According to the HCR 2 report, if no action is taken, Sussex Tech’s expenses will exceed income by $2.53 million in the upcoming fiscal year and by more than $3.34 million the following year.

“The combined steps we’ve proposed in our bill will make the school whole and temporarily stop it from incurring further deficits over the next two years,” Speaker Schwartzkopf said.  “This will give Tech’s superintendent and school board the breathing room they need to make substantive changes so the school can avoid operating in the red when the temporary tax hikes vanish in two years.”

Rep. Short said the main focus of the Sussex delegation’s work on a bill was ensuring the continued, effective operation of the school.  He said they also saw an opportunity to address several inequalities that have long drawn criticism from the county’s other public school districts.

Three of the bill’s reforms impact how students are selected to attend Sussex Tech.

The first requires a lottery to be held when applicants exceed the number of available slots for the new freshmen class.  The available openings would be filled in the order the applicants are drawn. **

The bill would also prohibit Sussex Tech from excluding from consideration any freshman class applicant eligible for promotion to the 9th grade.

If Sussex Tech administrators wish to return a student to his or her original school district for disciplinary reasons, the bill would prohibit them from doing so without the consent of the student’s parents and officials in the home district.

Lastly, the bill seeks to eliminate one aspect of so-called “legacy” selections.  Currently, the sibling of any current or prior Sussex Tech student is given preference for admission.  The bill would only allow such a preference if the sibling of an applicant was currently enrolled at the school.

Both Reps. Schwartzkopf and Short stressed an existing labor contract with the school’s teachers prevented legislators from any consideration of altering Sussex Tech’s salary structure, which is among the most generous in the state.  In fact, Sussex Tech teachers will receive a three percent raise in the upcoming year, the last year of the labor agreement.

While conceding the bill will not please everyone, Reps. Schwartzkopf and Short said it does provide a reasonable path for returning the school to a firm financial footing.

“This bill protects students’ futures while giving the superintendent and school board the time they need to consider carefully the difficult choices they will be weighing,” Rep. Short said.

The sponsors say they intend to work quickly to enact the proposal.  There are reportedly more than 700 applications pending for admission to the next fall’s freshman class.  Consideration of those applicants, as well as other decisions that need to be made in advance of the new academic year, have been in limbo pending resolution of the school’s difficulties.

The chair of the House Education Committee, State Rep. Earl Jaques, D-Glasgow, said his group will hold a hearing on the measure April 29th.

 

* Jumping from 19.71 cents per $100 of assessed property value in FY 2007 to 23.5 cents in FY 2010.

 

** While observing existing state law that ensures students from any one of the county’s public school districts are not disproportionally represented at Sussex Tech.

The Sussex County Post delivers news from Georgetown and southern Delaware. Follow @SussexPost on Twitter.

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