School board votes Friday on max tax increase
The recommendation is to approve a 1.8 mill tax increase.
When the school board votes on its final budget this Friday, the members will be faced with a $2.2 million deficit. A tax increase bringing in about $720,000 would help take some of the sting out of that deficit.
During Monday’s finance committee meeting, Director of Business Services Jim Grosch gave the board members a few final details… and explained that there were also details he did not have.
Grosch projects expenditures of $80,815,171 and revenues of $78,538,655 — a deficit of about $2.28 million.
The board, once again, questioned Grosch about the district’s ‘burn rate’ — the actual expenditures compared to the budgeted expenditures.
He said the burn rate in May was 97.46. Projected out to the end of the fiscal year — June 30 — that would mean the district would spend just under $2 million less than the budgeted amount for 2017-2018.
But, that budget included a deficit of about $2.3 million that the board planned to make up by eating into the district’s fund balance. So, the district will only have to spend down $300,000 of its fund balance if the burn rate remains 97.46.
“This year, the deficit is $2.276 million with a 100 percent burn rate,” Grosch said. “If we come in at a 97 percent burn rate… we would have, approximately, a 200,000 surplus.”
Grosch said he tightens the budget each year. Assuming a 98 percent burn rate, the deficit would be about $700,000, he said.
The budgets that are close to balanced are not going to last too many more years.
Grosch credited the board with taking appropriate actions over the years to position the district well. “You have been very conservative, very fiscally responsible,” he said. “We are in much better situation. There are a lot of school districts in three years that are going to be in a lot of trouble.”
“In three or four years, we’re going to be in big trouble,” Grosch said. “I think all the school districts will be.”
“It’s an $8 million deficit in 2022-2023,” he said. “At some point, something fairly significant is going to have to change.”
He suggested that the tax increase would be a prudent step.
Superintendent Amy Stewart agreed. “We’ve been looking ahead at what staffing looks like,” she said. “I don’t know what we’ll do next year… to go back to the well next year again with another six or seven (position cuts). I would agree with Jim, these dollars are going to help us retain some staff.”
“I want to make sure before we put this to a vote on Friday to make sure that we have left no stone unturned in an effort to avoid raising taxes by 1.8 mills,” committee chairman Arthur Stewart said. “If we assume the same for next year… even if we enjoy the 97 burn rate, we need the 1.8 mill increase to balance.”
“Even though I don’t favor a tax increase philosophically… if we are not projecting for the future and walk blindly into the future doing no tax increases, then we will be in for calamity,” he said.
What Grosch could not tell the committee and the board was exactly how many dollars to expect from the state.
Gov. Tom Wolf signed the state budget on Friday, but details are slow in filtering down to the district, Grosch said.
Based on the overall numbers in the state budget, Grosch is confident the district is “not going to receive a huge windfall.”
The district will get a bump of sorts. The state reimburses districts for some expenditures, including retirement benefit payments. The district’s reimbursable expenditures in those areas are increasing, Grosch said. “The increase is being caused by social security and PSERS going up.”
Arthur Stewart cautioned against thinking of that increase as a windfall.
“We know the state reimburses us 60 percent on PSERS,” he said. “It’s neither a surprise nor the giveaway that they would sometimes make it seem.”
“We talk about how dire our financial situation is looking,” committee member Joe Colosimo said. “Can this be addressed through a master facilities plan?”
Arthur Stewart said the retirement problem… “was a doable scenario… even under the current master facilities plan” 10 years ago. But the situation has only gotten worse.
The committee moved the final budget recommendation, with the maximum allowable tax increase, forward to Friday’s special board meeting.