Despite projected increases in sales tax revenue, the Troy City Schools is projecting a $750,000 operating deficit in its 2017 budget.

Mickey Daughtry, CFO for the district, presented the budget to board members in a public hearing on Tuesday. He projected revenues of $14.68 million and expenses of $15.43 million.

The biggest revenue loss from last year is the lack of revenue from the sale of capital assets.

Last year the school system sold the central office to the City of Troy for $1.8 million. There are no plans to make that kind of a sale in the upcoming fiscal year, Daughtry said.

The projected shortfall will be pulled from the reserves, but Daughtry said the district is still projected to end the year with 1.59 months of operating expenses in reserves.

State funding from the LEA allocation foundation is also projected to be lower, down from $2,099.65 in FY2014 to $1,945.25 in FY2017. Seven fewer teachers are funded by the foundation then in FY2014. The number of administrators funded by the foundation has not changed over that time span.

“That’s one of the challenges,” Daughtry told board members. “How do we pay for units not paid for by the state?”

Daughtry said increased sales tax, which makes up 50 percent of local revenue, could help fill the gap. He projected a 5 percent increase for the upcoming fiscal year after this year’s revenue exceeded expectations.

“I predicted $3 million for last year and my numbers are saying we could reach $3,140,000 by the end of the year,” Daughtry said. “So I forecasted for $3,140,000 for next year.”

Daughtry said that the Publix development should also help to increase sales taxes, but that there is no way to plan for that.

State revenue accounts for 55 percent of budget revenue, local accounts for 33 percent, federal for 12 percent and other sources add 0.2 percent.

The majority of expenditures, 55 percent, go to teachers.

“That’s where the bulk of the spending goes,” Daughtry said. “A teacher in front of students in a classroom.”

The next largest expenditure is instructional support services at 13 percent followed by auxiliary services at 8 percent, operation and maintenance services at 7 percent, debt services at 6.6 percent, general administrative services at 5 percent, other expenditures and other fund uses at 3 percent each, and capital outlay at 0.2 percent.

Personnel, which is included in several of the previously mentioned categories, makes up 73 percent of all expenditures at $14.8 million for the system’s 231 employees.

“That’s $3 out of every $4 that goes to pay for salaries and raises,” Daughtry said.

The personnel budget includes experience step increases totaling $56,000 and the state-mandated 4 percent pay raise for most of the personnel.

The majority of the debt services went to pay for bond debt, which makes up $1.1 million of the $1.3 million in debt.

The next highest amount was $100,410 in leverage debt, which will be paid in full by the state Daughtry said. The leverage debt is money held back by the state from capital outlay, which is later paid by the state.

Chromebook and iPad leases combined for about $60,000. A new phone system lease totaled $21,253 and a copier lease totaled $24,408. The copier will be paid off after this fiscal year.