A roughly 5-percent drop in total assessed valuation in the South Knox school district last year has resulted in the district having to cut more than a quarter of a million dollars from its 2019 operating budget.

Superintendent Tim Grove told members of the school board Tuesday evening that additional reductions in the value of farm ground in the largely agricultural district caused the $27 million drop in overall AV.

“This is the second year in a row we've seen this happen,” he said. “And we anticipated this happening, so when we put the budget together we based it on an assessed valuation that was 75 percent lower than last year.

“We always do AV lower to protect our property-tax levy, but we've been doing it even lower because of the decline in farm ground values,” Grove said.

According to Larry DeBoer, an agricultural economist at Purdue University, the “base rate” for farm ground assessment has been falling since 2016 after an 8-year period during which the rate more than doubled.

DeBoer expects another drop in the base rate this year.

In heavily-rural areas like Knox County, lower farm ground valuations equal higher tax rates and/or less property-tax revenues for local governments.

For South Knox, the drop resulted in the Indiana Department of Local Government Finance ordering the school corporation to cut $267,298 from its operating fund.

However, Grove said there was sufficient money in the reserve to make up the difference.

“So we came out OK,” he said, adding there was still almost $650,000 in emergency money available.

The district's 2019 operating budget is just over $5 million while its education fund is just over $8 million.

The fall in assessed value does mean about a 9 percent increase in the tax rate, to just under 77 cents per $100 of assessed value.

The DLGF order won't impact the district's capital projects fund, from which Tuesday evening the board approved over $500,000 in work for this summer, ranging from new HVAC units to ceiling insulation to air intake units, from new auditorium lighting to trophy cases to a new sound system at the middle school gymnasium.

The projects also include new teacher desks at the middle-high school, refinishing the high school gymnasium floor and — the largest expense on the list — three new tennis courts at a cost of $150,000.

Grove said the overall cost of the projects was “similar to what we expected them to be.”

Copyright ©2019 Vincennes Sun Commercial