Tax increases, furloughs and not replacing retiring employees are three ways area school districts are addressing 2017-18 budget shortfalls that are primarily happening because of increased pension costs and changes to state funding.
Although Gov. Tom Wolf and House Republicans proposed a $100 million increase in the state’s 2017-18 budget for basic education funding, they proposed cuts to other school programs, such as a cut of $50 million to school transportation, according to the Campaign for Fair Education funding. Pension costs are projected to rise $140 million, requiring districts to find big chunks of money to make required contributions.
The top three actions school administrators plan to take in the 2017-18 school year as a result of budget funding issues are taking money from the fund balance, raising local property taxes and reducing staffing, according to the Pennsylvania School Boards Association’s most recent state of education report.
The report states 74.7 percent statewide planned to draw from fund balance, 72.9 percent expected to raise local property taxes and 47.6 percent planned to reduce staff/number of positions.
At McGuffey School District, the school board voted to eliminate nine faculty positions, two of them part-time, and three support staff members to help balance a $31.6 million budget that also required a .35-mill tax increase.
Monessen School District is also in financial straits and looking at layoffs.
The school board will adopt a $15.9 million 2017-18 budget Tuesday, which includes a 6-mill tax increase, the furlough of eight full-time teachers, and the elimination of gym, art and music classes at the elementary level.
Washington School District is raising taxes by the district’s allowed index of 3.5 percent and reducing two teaching positions through attrition, said Business Manager Rick Mancini. He said pension costs will increase in the budget for the upcoming year by 9 percent, health care by 10 percent, salaries by 2.9 percent and cyber school by 8.5 percent. Washington cut $80,000 from the equipment budget, he said.
“The rest is flat,” Mancini said of the budget approved earlier this month. The 2017-18 budget is $27,705,787 with a 15.1578 millage rate.
West Greene School District is one of a very few school districts not raising taxes this year but will not replace two retiring teachers, said Superintendent Brian Jackson.
“We increased taxes last year so we are holding off this year,” he said.
Ringgold increased its taxes by the allowable index of 3.2 percent to meet the $44.3 million spending plan, said Superintendent Karen Polkabla. She said that there are two teaching positions that will not be replaced.
Ringgold will receive an increase in basic education funding of $114,145 and special education funding of $46,656. Pension expenditures for the proposed 2017-18 budget are $5,801,716. This reflects a gross increase of $595,726 from the 2016-2017 school year, she said.
Canon-McMillan School District Superintendent Michael Daniels said the district is still finalizing its budget up until the school board vote on Thursday. He said it does not appear that it will need to exceed the district’s allowable tax increase index. The district’s index is 2.9 percent, according to the Pennsylvania Department of Education website.
Fort Cherry business manager Jessica Drylie said last month that the district’s proposed budget did not call for furloughs, but that could change. The proposed budget did take into account the retirement of three teachers who will not be replaced. It does include a 3.2 percent tax increase.
Fort Cherry’s budget includes $17.5 million in expenses. Drylie said the largest cost increases facing the district are in salaries and benefits – including health care and state-mandated contributions into the system that funds public school workers’ pensions – which increased by $950,000.
Bentworth School District is not furloughing any employees.
“We’re very proud of that,” said Superintendent Scott Martin, adding that over the past decade, employees have absorbed work through attrition of others. “Everyone here has felt the pain.”
Bentworth is planning for the maximum allowable tax increase of 3.4 percent, he said.
Martin said he feels like the state is on the right track with how it is handling the pension crisis.
“They have to start somewhere,” he said.
Gov. Tom Wolf signed legislation last week that is projected to provide a less expensive pension benefits structure in the coming decades. In addition to reducing the retirement benefits of most future public school and state government employees hired after 2018, it will also shift some risk of investment losses off taxpayers and onto the public employees of tomorrow by introducing a 401(k)-style benefit.
With legal and political hurdles to paring benefits of current employees and retirees, the bill’s impact will be limited for the next three decades. It also will not stop the rising pension obligation payments that are squeezing school district budgets.
“The fact that they have to reform for all future hires means that, eventually, and very eventually, there will be some relief,” said Olivia Mitchell, executive director of the University of Pennsylvania’s Pension Research Council. “However, the current defined benefit plan is underfunded and is not fixed by that reform. In other words, legislators will still have to put in place additional reforms to solve the underfunded system that’s been in place for so long in the past.”
The Associated Press contributed to this report.