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Officials: county FELO changes, Act 388 and abatements erode local school revenue
Summary
District staff told trustees that changes in county FELO distribution, state homestead exemptions (Act 388) and tax abatements have reduced revenue available for operations, citing $329.86 million in foregone revenue from abatements over nine years and noting FELO distribution now directs roughly 80% of fees to the county.
During the budget work session, Greenville County Schools officials laid out how local and state policy changes have constrained operating revenue and complicated pay and staffing decisions.
Robin Stack described a county ordinance that changed how fee‑in‑lieu (FELO) revenue is distributed, saying the county now keeps about 80% of resulting FELO money for new FELO agreements effective Jan. 1, 2023. "In 2025, Greenville County changed the distribution to increase the amount of revenue kept by the county, to be 80% of the resulting fee revenue compared to the prior years, which was approximately 31%," Stack said. Board members asked whether the county will redirect those dollars to roads and other county priorities; staff said the county has discretion over its share.
Dr. Royster highlighted long‑running impacts of abatements and statutory choices: staff presented a nine‑year total of about $329,860,000 in tax revenue that did not flow to the district because of abatements and multi‑county arrangements. Officials argued those foregone revenues help explain why the district had to raise millage in past years to sustain budgets.
On state policy, staff reviewed Act 388 (the homestead exemption and millage cap statute) and the state's replacement mechanisms, including the Homestead Exemption Fund (HEF). Stack said that Act 388 removed owner‑occupied residences from operational taxes and imposed millage caps tied to inflation and population growth, and that the FY27 preliminary HEF preliminary estimate is about $107,146,000 for districts statewide. Staff described the complexity of how the state calculates an operating replacement and noted that the state's new education funding formula increases some weights (for CTE) but reallocates certain funding lines.
Trustees pressed staff on practical effects—how FELO renewals will change district receipts over time and how county collection choices reduce money that otherwise flowed to schools. Staff said TIFs and locally approved tax‑increment deals are different: the board had a voice on district‑level TIFs and their school‑district share is locked in, while multi‑county FELOs and some abatements are outside the board's control.
District staff framed these shifts as background constraints on the FY27 budget: they said the revenue picture improved from last year’s formula changes but warned that future county or state policy choices could materially change available funding.
