School funding is complicated at best, with many moving parts that remain in motion throughout the year. That means the districts must be ready to adjust their budgets rapidly to meet the needs of the students while remaining fiscally responsible and in compliance with state standards.
And when a software glitch is added to the mix, it can really throw a monkey wrench into the works. That is exactly what happened earlier this year to the Watonga School District.
The Blaine County Assessor’s Office had sent its valuation to the district. Essentially, the office determines the value of property in the county and estimates what the property taxes will pay to the schools.
It is not uncommon for a taxpayer – usually commercial endeavors – to disagree with the county’s numbers. They then file a tax protest.
When that happens, the taxes in question are paid, but not allocated until the protest is cleared. The protests are not included in the valuation on which the school bases its budget.
That’s where the wheels fell off the bus. The software program did not roll the tax protest amounts over, causing that value to be included in the valuation rather than excluded. That inclusion, in turn, caused the valuation to go up when it should have been reduced. It is the policy of the district to base the budget on the expectation of receiving 90% of the amount the valuation would provide. That budget expectation is called an estimate of needs and is approved or denied by the county excise board.
Although the estimate of needs was approved, Hilterbran said the district caught the error, which equated to a nearly $700,000 shortfall in ad valorem – basically property tax proceeds. Blaine County Tax Assessor Misty Kitson said this has occasionally happened in other counties to other school districts in prior years. Since the bug was discovered, her office has instituted multiple checks and balances to mitigate the chance of a recurrence. There are also now secondary protest tracking spreadsheets as well as informal protest tracking.
“Hopefully this will catch it if this ever happens again,” she said.
The window to make an adjustment in the numbers provided to the Oklahoma State Board of Education is narrow. If an error isn’t found and reported inside the window, the school district involved is out of luck, Hilterbran said.
Acting as quickly as possible, in May the district held a special meeting, asking the assessor to notify the OSBE of an error and providing a new form with the corrected information. That way, the state could use the updated numbers to calculate the money it would provide to the school district.
The state adjusted the aid it sends by $400,000. “It was fortunate,” Hilterbran said. “It could have been very bad for us. We reached out to the assessor, and that’s when we found out there was an error. Because of that expediency, we were able to recapture that extra $400,000 and minimize the deficit on our estimate of needs.”
A few other things worked in favor of the district. It had only spent about $50,000 over what it brought in. And the district had a strong carryover of $9.3 million.
“We may have to tighten our belt a little,” Hilterbran said. “And we will have to be cognizant of the valuation in the future.”
That will be especially true since the Legislature has passed new laws affecting what county assessors can include when they value oil and gas exploration equipment and properties. Those changes may impact the gross production taxes that provide significant funding to the schools.