Down and Out in Laurel: State names financial recovery team for school district

News that the state had named a financial recovery team to help manage Laurel School District’s finances was not wholly unexpected. The district, which now expects a $106,000 budget shortfall for the current fiscal year, has been steadily sounding alarm bells about its dire fiscal predicament over the past several months, including the possibility that it would not have funds available to meet payroll. While Laurel has taken some proactive steps to cut its costs—including a hard hiring freeze and agreeing to a novel administrative services sharing arrangement with Delmar—these steps were clearly not enough. The financial recovery team, which includes a mix of state officials and the business managers of two other Sussex County school districts, will now have extraordinary powers over Laurel’s finances, including approving district budgets and individual expenditures.

While Laurel’s dilemma is certainly man-made—indeed, many of Delaware Department of Education’s suggested budget cuts around cell phones, vehicle leases and office costs have not been enacted—the situation has indubitably been exacerbated by Delaware’s woefully outdated property assessments.  Properties in Sussex County have not been reassessed since 1974, when the median home price in the U.S. was $36,000. Notwithstanding the potential for further operating expense reductions, it’s no great wonder that Laurel lacks the wherewithal to fully solve this mess on its own. Each one cent increase in its tax rate generates only $11,000 for the district, meaning that Laurel is overwhelmingly beholden to the state for school funding. Until our policymakers can agree to proceed with a much-needed statewide reassessment, even more Delaware districts are likely to find themselves at the financial precipice.

Related Topics: DDOE, Funding Flexibility