With a working budget set for fiscal year 2014, the Dawson County Board of Education has moved on to addressing the school system's millage rate.

The challenges of a declining tax digest and rising costs came to the forefront Monday, during the first two of three public hearings on the issue. The third and final hearing is set for 8:30 a.m. July 12 at the board office on Allen Street.

The millage rate is part of a formula used to calculate property taxes, where one mill equals $1 for every $1,000 in assessed property value.

Last month, the board set a $32 million budget for the new fiscal year, which started Monday. The budget was set with the expectation the tax digest would continue to drop, this time by about 9.4 percent.

While the digest is estimated to fall by 7.33 percent, the board always factors in some extra "cushion," according to School Superintendent Keith Porter.

"After six straight years of declining tax digests in Dawson County, we are hopeful that FY14 will be the last decline, and property values will stabilize," Porter said.

"Although the economy seems to be rebounding in many areas, as far as school funding is concerned, we are entering our lowest economic time. We are hopeful that the ... budget, which we are presently entering, will finally be the funding ‘basement' for our school system."

In order for the system to operate on its current budget, the millage rate would need to be raised to compensate for the declining tax digest.

The school board has proposed raising the rate by 1.7 mills, to a total of 17.246 mills. That would amount to $40 more per mill, per home.

According to Porter, leaving the millage rate untouched could carry consequences.

Failing to secure the necessary $4 million and then going into debt could lead the state to take over the school system. It would then set the millage rate itself and constantly monitor the district until the debt and ensuing state levies had been repaid.

"They'll raise your millage for you," said board member Elaine Wilson. "We had that happen to us a long time ago. For three years, our millage was set for us at 17.4 percent because we had run a negative fund balance at the end of the year."

If that scenario were to unfold, the state would give the school board three years to eliminate the negative fund balance and restore local control.

Without raising the millage rate, the board would be in the black all throughout fiscal year 2014, but end fiscal year 2015 with a $4 million deficit.

If the millage rate increase passes, the system would have enough money to operate both years without a deficit, Porter said.

According to board member Will Wade, one of the issues with the millage rate is the state's Quality Basic Education Funding, or QBE, program.

The program automatically takes 5 mills from the board's tax revenue and redistributes the funds to other school systems in the state.

Because Dawson County has high property values in certain areas, it's considered one of the wealthiest counties in the state. In return, the county receives none of these funds back in compensation.

The formula has not been updated since it was introduced in 1985.

"We, as individuals and as a group, have tried to compel the legislature, as well as other school boards across the state, to push the issues about the QBE formula," Wade said during the second hearing.

"Based on this formula, this region of Georgia - that includes 12 counties such as Dawson, Lumpkin, Pickens and Hall - contribute $100 million every single year in total."

According to Wade, of the counties in this region, only Hall gets money back as part of the formula, receiving about $3 million from the state.

"The school boards can push the issue all we want, but that's not going to fix it. The taxpayers are going to have to start bringing up the issue of QBE with their government," Wade said.

"We need help to use our funding more flexibly, so that in times of growth we can use [sales tax] dollars to build. And in times like this, we can use these funds to deal with things like rising health care costs and teacher retirement funds. But we need your help as voters. You have to voice your opinion and we need your help."

According to Porter, the school system has cut back in every conceivable way over the years in order to avoid raising the millage rate and putting the burden on the taxpayers.

"In the FY13 school year, we reduced staff by 41 employees from the previous year, and at the same time, saw our student enrollment increase," he said.

"Over the past five years, our employees have lost over $10 million in salary and benefits as we have tried to make our budgets work through calendar reductions and reductions to benefits."

Porter said the system has also been forced to eliminate four middle and high school academic programs over the past two years, reduce the school year for students by two days and raise class sizes.

"We have truly reached a critical time that we must struggle through and still maintain a quality education for our children," he said. "With these cuts, we have tried to buffer our students. But even with our best efforts, decisions are now impacting students."