Superintendent Wayne Carr updated the school board Thursday as to where the district stands, saying he had an email from Arkansas Education Commissioner Tom Kimbrell requesting another meeting to discuss the matter.
Carr and board president Rusty Windle met with Kimbrell on Nov. 19 after receiving an email the day before informing the district that its "wealthy" tax revenues exceeds the state's designated funding of $6,023 per student, based on a required minimum of 25 mills set aside for operating revenue. Funds in excess of that need to be distributed to districts that cannot generate that amount.
Eureka Springs generates $7,261 per student.
The state's demand was backed up by an opinion from Attorney General Dustin McDaniel.
Carr said he had spoken with Rep. Bryan King. "He seemed to think it will be brought up in the legislature in January," Carr said. "This has to do with the funding in the entire state."
Carr and Windle have also met with the superintendents of the other three districts involved: Fountain Lake in Hot Springs, Westside in Greers Ferry and Armorel in Eastern Arkansas.
Carr said the districts are consulting attorneys about the school funding formula, which at best seems inconsistent. He also said the districts did not have a year's notice as the state has claimed.
The disagreement stems from two separate laws that pertain to how school funding is determined. One is that each district is entitled to 98 percent of its property tax billing. Eureka Springs only collects about 94 percent of its tax billing.
The 98 percent is based on the calendar year. The $6,023 per student is based on the school fiscal year, which ends June 30.
"There was a precedent in 2009 that if a district didn't make it, the state would pay it," Windle said, "or if you made more, the state said it was going to take it, but that was waived when the school districts fought it."
Eureka Springs' four percent difference last year amounted to $176,000. At first the state said they would not pay it, but then relented. According to the state, that was the "year's notice" that Eureka Springs would have to return excess millage revenues.
"That challenge brought this to light," Windle said.
The other law is the 25 mills minimum.
Carr pointed out that any money generated in excess of $6,023 per student doesn't actually go to poorer districts, as every district gets the same. It just means less money coming out of state coffers from other sources, such as sales tax.
Carr reported officials from the Finance Division and Standards, and the School Equivalent Unit, had been up to Eureka Springs recently to look at school finances.
"I asked them to look at what cuts we could make and still meet standards," he said. "Any extra money has to be used for specific purposes, it can't be used to meet standards."
He said those officials agreed the district is already pretty "lean," and could not suggest cuts he was not already looking at.
"In January we'll send out 'intent to return' forms to see who might be retiring," Carr said.
"We will look at not replacing retiring teachers and at hiring teachers that are lower on the salary schedule."
He said the district will also look at reducing building improvements and utilities.
The in-town bus route, which had a substitute driver on it, will be eliminated in January. The reduction had been planned a couple summers ago, he said.
As for rumors about eliminating summer school, Carr said it had not been discussed. The district will try to find a different pot of money for the summer school credit recovery program.
Because of state standards, there are some programs that cannot be cut, he said.
"We have to have an AP [Advanced Placement] program in each of the four core subjects."
One thing Carr said he wants to make clear to the public is that millage for the new high school has nothing to do with the 25 mills required for operations. The high school millage is dedicated to that capital project, which will go forward.
Any changes to the design or reductions in non-fixed assets would come from money sources that were not restricted to capital improvements to begin with but had been included in the planning until the district learned of the state's demands.
Windle noted that members of the public have asked about voting to reduce the millage or getting the county to reduce its property valuations as a way of avoiding having to pay the state excess revenues.
"In the long run that solution doesn't help us because millage above the 25 mills goes to debt service for capital improvements, and that debt service is based on those property valuations."
Carr, Windle and board member Karen Gros met with State Sen. Randy Laverty on Monday to update him on the situation and to hear his advice on how to proceed.
"It's not just these four districts that will be affected by this," Windle said. "Next year, other districts will come under this ruling as well."
Laverty said he would further research the state funding formula, although he said any legislation would be a "long-term solution" at best.
In the meantime, he plans to attend the next meeting with Commissioner Kimbrell.