- Murfreesboro City Schools also saw MED revenues decline $ 175,000
- The mayor plans to reduce MED revenue, the mayor says
- School districts receive taxes on MTE’s additional assets from MED
- Councilor Ronnie Martin says the board should have been informed in advance of the impact of school income
Rutherford County Schools officials want the city of Murfreesboro to pay the district an unexpected $ 934,000 loss of revenue caused by the sale of the Murfreesboro Electric Department last year.
“We have received no notification,” said Doug Bodary, assistant superintendent for budget and finance for the district. The annual funds were considered payments instead of taxes (PILOT).
The county’s school district has a budget of $ 421.7 million this year to run 49 schools with approximately 46,800 children.
Jeff Reed, attorney for the Rutherford County Board of Education, agreed to write a letter to the city asking for a refund. However, Murfreesboro Mayor Shane McFarland questioned the attitude of school officials.
“It’s no longer a state good,” said McFarland, who was part of the city council’s decision to sell the utility to member-owned Middle Tennessee Electric in January 2020. The deal gave the city $ 302.5 million in payments over 15 years. “It’s not that this process was a closed discussion with MED. It’s been talked about for five or six years. We’ve talked about how this will affect the city budget.”
City Schools’ revenues drop by $ 175,000
MTE took over the city’s electricity division on July 1 after the county school officials worked out a budget that continued to be based on the PILOT funds, Bodary said.
The MED sale also meant Murfreesboro City Schools lost approximately $ 175,000 in revenue that year, district finance director Michael Smith told the city school board last week. However, Smith said the borough should ultimately see an increase in MTE revenue if previous MED taxable assets are determined by the state.
However, Bodary anticipates that future revenue from these previous MED assets will be below the $ 934,000 he expected this year.
Governments should continue funding efforts for schools, according to Bodary, a former accountant for the State Comptroller Office.
The city is working with the state appraiser’s office to have the former MED property valued later this year, city administrator Craig Tindall said. Once the valuation is complete, MTE will pay property taxes, which are expected to be due July 1, Tindall said.
“The county will apparently receive property tax payments for the second half of 2020 and thereafter based on the state’s assessment,” Tindall said.
He expects the county to raise more MTE taxes than PILOT funding from Murfreesboro Electric. Every school system has “enough resources to maintain its spending,” said Tindall in the meantime.
City council: “Not too late” to solve the problem
Murfreesboro City Councilor Ronnie Martin said there had never been any discussion of the loss of school district income or the impact on MED workers’ pensions.
“None of these things were discussed prior to the merger,” Martin said, adding that the merger agreement was intended to ensure that school districts get their MED revenues this year. “We would have insisted that this be done on the front end.”
Martin was the only councilor who spoke out 6-1 against the city’s MED sale. The city should provide the expected funding for the school districts, he said.
“It’s not too late,” said Martin. “We can do something about it.”
The city had received a nearly $ 3 million PILOT from MED, so officials prepared a conservative budget for Middle Tennessee Electric’s expected revenue of $ 2 million, Mayor McFarland said.
McFarland believes MTE taxes, which include former MED assets, will help offset the loss in sales.
“Middle Tennessee Electric has been paying taxes since they got here,” McFarland said. “You are a good business partner.”
Councilor Bill Shacklett said he expected the revenue problem for both school districts to be resolved and called the loss of funds “an unintended consequence”.
“We’re trying to figure out how exactly that’s going to happen. I really believe that every heart is in the right place,” Shacklett said.
Reach reporter Scott Broden at email@example.com or 615-278-5158. Follow him on Twitter @ScottBroden.