While the Pottsville Area school board has managed to hold the line on taxes for a decade, school board President John F. Boran said Wednesday the tradition won’t continue into the 2016-17 school year.
“A tax increase is imminent,” Boran said at a special meeting held at the Howard S. Fernsler Academic Center. He said the rising costs related to charter schools, special education and retirement are among the reasons why.
The school board’s finance committee, which Boran chairs, was prepared Wednesday to recommend the tentative adoption of a $42,598,089 spending plan for the 2016-17 school year with a 1.15 mill tax increase, the maximum allowed under Act 1.
But the number crunching continued in two executive sessions Wednesday night, and Boran said the committee will be prepared to make the recommendation at a board workshop at 5:30 p.m. and a regular meeting at 7 p.m. May 18.
The board also set the date for the final adoption of the budget: June 22, when the board will hold a workshop at 5:30 p.m. and a regular meeting at 7 p.m.
Meanwhile, the board put its plan to outsource its transportation on the back burner.
“That’s still in committee. That’s not gone any further. I haven’t had time to even deal with that yet. But that is an avenue that’s being looked at,” Boran said.
On Dec. 2, the school board voted not to pursue a weighty tax increase for 2016-17 school year.
“It is recommended that the board adopt a resolution pursuant to Section 311(d)(1) of the Special Session Act 1 of 2006 indicating that the Pottsville Area School District will not increase any school district tax for the 2016-17 school year at a rate that exceeds the index as calculated by the Pennsylvania Department of Education,” Boran said at the board’s Dec. 2 meeting.
That index is 3.4 percent of the district’s current millage rate, 34 mills. So the school board could increase its millage to 35.15 if necessary, Stephen C. Curran, the district’s business manager, said that night.
On Wednesday, Curran described the district’s financial situation with a slide show that lasted an hour and a half. The district’s principals and leaders of many of the district’s departments were present for it.
The district’s 2015-16 budget was $43,972,595. The proposed budget for 2016-17 is 3.13 percent less than that, Curran said.
“In order to balance the budget, we are proposing the allocation of the fund balance of approximately $2,894,208. The current undesignated audited fund balance is $5,909,699,” Curran said.
At one time, the district’s fund balance was around $16 million, Curran said, and he explained why that changed.
“On January 18, 2011, Tom Corbett took office and stated public education can no longer be a recession-proof industry and cut $860 million in his first year, level-funded special education and eliminated the 30 percent charter school cost reimbursement. Overall a billion dollars was cut from public education, 20,000 plus employees were furloughed, classroom sizes increased, elementary art, physical education and music were eliminated from many schools, nursing services were reduced as well as the number of guidance counselors,” Curran said.
“At the end of the 2010-11 fiscal year, the district realized a fund balance of $16,067,259. Charter School Reimbursement Revenue was eliminated as other state revenue was reduced or minimal during this time frame as compared to prior administrations thus depleting the above figure,” Curran said.
“In 2010-11, our costs for cyber/charter schools was $515,867.19. At the end of 2014-15, we spent $1,956,258.01, an increase of $1,440,390.82,” Curran said.
“So what does that mean? Since 2010 through 2016, we spent $8,985,307.41 in cyber/charter schools without any state reimbursement which contributed in draining our fund balance. Assuming the 30 percent reimbursement remained, the fund balance would exceed roughly $8,600,000. Assuming those costs were eliminated or funding reforms implemented, the fund balance would be in excess of $13 million,” Curran said.
But that wasn’t the only expenditure to seize the district’s coffers. He said the rising costs associated with the Public School Employees’ Retirement System and special education are also concerns.
“In 2010-11, our cost for PSERS was $921,370.71. For 2016-17, our costs are $5,418,319, an increase of $4,496,758,” Curran said.
“As of May 9, 2016, the district had 557 students receiving special education services, approximately 101 additional students from the 2013-14 data count. Does this increase our costs? Yes. We spent $5,084,941 in 2010-11 and in 2014-15 $6,501,437, an increase of $1,416,496. The 2016-17 costs are estimated at $7,020,323,” Curran said.
Looking ahead, Curran said, “The district will take proactive steps throughout 2016-17 by developing a deficit reduction plan and exploring options for maximizing our revenue stream. Public education budgeting in Pennsylvania is a year by year process with a level of uncertainty, new challenges and unforeseen circumstances that may impact our fiscal future.”
If the state ends up in another budget impasse and fails to pass a 2016-17 budget on time, the Pottsville Area School District will be forced to open a line of credit over the summer, Curran said.
“The district will develop a preliminary budget in December 2016/January 2017 including applying for any eligible exceptions under Act 1 to maximize revenue,” Curran said.
“Do you feel comfortable with the budget, Steve?” board member William R. Davidson asked.
“It’s keeping me up at nights. It’s been very disturbing. Believe me. The bottom line is, in the end, we’re going to get through it. I know we have the team here that will do everything we have to beat this,” Curran said.