HOW IT WORKS #1: Salary Supplements & Sales Tax Revenues

 

how it works

 

The appropriation of an employee salary supplement at the Calcasieu Parish School Board’s November meeting brought about a discussion of sales tax revenues and an opportunity for further explanation of this process.

 

Parish-wide revenues from annual sales taxes for the Calcasieu Parish School Board are comprised of a 1¢ permanent tax and three ½¢ renewable taxes. Two of the ½¢ taxes are specifically dedicated to employee salary related expenditures. The growth in our local economy has recently had a positive impact on revenues collected from each of those taxes. While CPSB has certainly benefitted from the windfall created by industrial expansion, challenges arise in estimating how much of this growth will diminish once the construction is complete. CPSB has been hesitant to tie these potentially non-recurring revenues to permanent recurring expenditures. Data presented below outlines information about each of the sales taxes collected for CPSB.

 

1¢ Original Approval – 1968 (Permanent) – used “exclusively to supplement other revenues available to the School Board for the payment of salaries of teachers in the public elementary and secondary schools of the Parish and for the expenses of operating said schools, such operating expenses to include payment of salaries of other personnel employed by the School Board in addition to teachers, and for such other uses as are now or may be hereinafter provided for by law.”

 

Since over 80% of a school system’s budget is generally comprised of salaries and benefits, as a service organization, this tax call had mention of employee salaries, but also referred to expenses of operating schools and other uses.

 

½¢ Original Approval – 1987 (5 years) – Last renewed in 2012 (10 years) – used “to offset losses of revenues from the State of Louisiana, and/or supplementing other revenues available to the district.”

 

This tax was approved by the public at a time when Louisiana was struggling financially and state revenues to Calcasieu Parish education were in jeopardy. The tax was not limited to any expenditures. A 10-year history of the above two taxes totaling 1½ cents by fiscal year (July 1 to June 30) is listed below.

 

2017-2018       $120,488,919                                              2012-2013        $68,907,016

2016-2017           97,653,256                                              2011-2012          66,984,393       

2015-2016           90,753,065                                              2010-2011          60,396,137

2014-2015           79,232.061                                              2009-2010          60,122,710

2013-2014          70,424,613                                               2008-2009          68,310,684

 

 

At its March 13, 2018 meeting, the Calcasieu Parish School Board authorized the use of available revenues along with other undedicated reserves on hand to fund $50 million in school maintenance and construction projects. These funds, allocated by pupil count in bonding districts, will help update school facilities and offset some of the projects that would have been dependent on future bond funds. The $50 million allocation was divided into two phases. The first $30 million in cash was transferred to a separate fund on April 17, 2018, to be tracked by expenditure, type and location. The remaining $20 million would be obtained from issuing debt with a 10-year payback from the General Fund line item budget, once the original $30 million is exhausted.

 

 

½¢ Original Approval – 1995 (10 years) – Last renewed in 2014 (10 years) – “used for the purpose of supplementing salaries of teachers and other employees of the Calcasieu Parish School Board.”

The tax has been tracked monthly since its inception and provided the following salary funding:

 

  • 1995-1996 - $3,300 to all levels of teacher salary schedule and support raises of 10% (not less than $1200)
  • 1996-1997 – raises to teacher salary schedule to create at least $350 between steps and $1500 between degree levels and one additional step to each support schedule
  • 2015-2016 - $400 raise to teachers’ salary schedule as part of $4000 raise

 

After the first two years, the tax proceeds have also been used to provide numerous one-time salary supplements to active employees in identified years from 2002 through 2018. Revenues and expenditures for the last 10 years from this ½¢ sales tax are listed below.

 

Year                   Revenues                Expenditures           Annual Balance   Accumulated Balance

2008-2009       $22,828,473               $22,848,767            ($20,294)                $1,670,680

2009-2010       $20,069,956               $20,189,752          ($119,796)                $1,550,884

2010-2011       $20,178,106               $20,189,752            ($11,646)                $1,539,238

2011-2012       $22,357,167               $20,189,552         $2,167,415                $3,706,653

2012-2013       $22,994,935               $24,689,752        ($1,694,817)               $2,011,836

2013-2014       $23,476,779               $22,494,184            $982,595                $2,994,431

2014-2015       $26,410,649               $25,980,128             $430,521               $3,424,952

2015-2016       $30,252,473               $29,119,209          $1,133,264               $4,558,216

2016-2017        $32,549,362              $23,601,183          $8,948,179               $13,506,395

2017-2018        $40,161,441              $38,692,645          $1,468,796               $14,975,191

 

The balance accumulated and not expended at June 30, 2018 for this tax was $14,975,191, as reflected in the CPSB financial report.

 

The last approved ½¢ sales tax was first approved in May, 2015, for a period of 10 years with the proceeds of the tax dedicated exclusively for supplementing the salaries and benefits of teachers and other employees of the Calcasieu Parish School Board. The tax was projected to generate $22,500,000 in its first full year, based on historical collections available. The tax has been used to fund the following (as accounted for in a separate fund in the system’s accounting structure):

 

  • 2015-2016 - $4,000 raises to teachers’ salary schedule and all associated indexes and 10% increase to all support schedules with select schedule extensions
  • 2016-2017 – Contribution to local one-time supplement of $1,450 to employees on the teachers’ salary schedule and $1,000 to all employees not based on the teachers’ schedule
  • 2017-2018 – Contribution to benefits of one-time supplement of $2,850 to employees on the teachers’ salary schedule and $2,000 to all employees not based on the teachers’ schedule

 

Revenues and expenditures for the first three years of the tax are as follows:

 

Years               Revenues                Expenditures              Annual Balance    Accumulated Balance

2015-2016         $29,405,815            $18,182,422               $11,223,393          $11,223,393

2016-2017         $32,612,574            $26,344,461               $ 6,268,114           $17,491,507

2017-2018         $39,154,901            $23,325,779              $15,829,122           $33,320,629

 

The Calcasieu Parish School Board took action at its meeting on March 13, 2018, to set aside $20 million of the $33,320,629 balance from the 2015 sales tax for future salary and benefit related expenditures. Since sales taxes are volatile by nature and are even more unpredictable in our region, CPSB made the decision to reserve the funds until revenues stabilize both locally and from the state. Portions of remaining balances from the two 1/2¢ salary related sales taxes funded the 2018 October COMPASS payouts and the November one-time salary supplements.

 

It is always our goal and mission to ensure employees and the entire community stay informed of actions and decisions made by CPSB, especially when it pertains to tax funds and employee benefits and salaries. We value our employees and the job they do each day building foundations for the future.