From the BCCT:
Making budget won't be getting any easier
By: GARY WECKSELBLATT
Bucks County Courier Times
Districts fret over the future as limits may tighten property tax increases.
As they lick their wounds following a difficult budget season that included rare salary givebacks from some local teachers' unions, area school officials face the realization that getting the numbers to fit a year from now will be even tougher.
While most districts were allowed to raise property taxes by 4.1 percent under a state-mandated index, there's speculation that next year's figure could be about half as much. So if salaries are set to rise by, let's say, 4 percent and health care and energy costs increase by double digits, the numbers just won't add up.
"We're all guessing," Sylvia Lenz, Quakertown's business administrator, said of next year's index. "I've heard 1.5 percent, but I have not done the calculations. We know it's really going to be another tough year."
Earlier this month, Stephen Hladik of the North Penn School Board told members "Right now we're looking at something like a 1 percent Act 1 cap."
The index the school officials are referring to derives from Act 1, the state's property tax relief law. Should a school board want to exceed its district's state-determined index, it must apply to the state Department of Education for exceptions or get voter approval through a referendum.
This index is determined by averaging the statewide average weekly wage with employment-cost data from the Bureau of Labor Statistics. It won't be made public until Sept. 1.
"We really don't speculate on that," Michael Race of the state education department said of the index.
Jay Himes, executive director of the Pennsylvania Association of School Business Officials, has done some calculations and said the numbers "clearly next year won't be as favorable. We won't see anything near 4 percent."
Himes said the number is likely to be in the "high twos to low threes, if I had to predict."
That would be the lowest percentage districts could raise property taxes since Act 1 passed the general Assembly in 2006. The numbers have been 3.9, 3.4, 4.4 and 4.1.
Those figures, however, were calculated before the housing market had tanked and unemployment approached 10 percent.
"If the economy is still like this next June I think we've got significant problems," Himes said. "Districts with shortfalls have used much of their fund balance and there could be the continuing cost escalation in utilities. It has the potential to be extremely difficult.
"In Bucks County, there's a lot of reliance on local resources (because of how the state dispenses education funds). There are some people very worried about the sustainability of education in this environment. It's a problematic and complex situation."
Kathy Mosley of the Quakertown School Board, which, along with Council Rock, convinced teachers to accept givebacks this year, told members at their June meeting that passing future balanced budgets could mean having residents approve tax increases via referendum.
"The writing's on the wall," she said.
Mosely, in fact, advocated finding ways to spare more programs now. "If we cut so significantly this year what is left to cut next year?" she asked.
Not everyone sees the angst among school officials as a bad thing.
Nathan Benefield, policy director of the nonprofit Commonwealth Foundation, which promotes limited government, said with inflation so low "school districts should be able to do more with less, just as taxpayers do. The problem is school spending has gone far above the rate of inflation."
Simon Campbell, president of StopTeacherStrike Inc., in Lower Makefield, claims district budget problems are of their own making.
"We're in a recession," he said. "It's unfortunate that some school board officials think everyone else has to restrain purse strings except them. They must live on a different planet.
"Their problem is they typically give away the farm to the teachers union and then they squeal about how tough it is. If they took a tougher line in contract negotiations, it would give them more flexibility to help students."
Besides a shrinking index, districts are not able to feast on transfer taxes as they had for a decade and many have fewer dollars coming in from both personal and earned income taxes as their residents lose jobs or take pay cuts.
Combined with that is the looming pension crisis that's three years away. In 2009-10, districts will contribute 4.78 percent of payroll to the state's pension system. In 2012-13, that number, which has yet to be finalized, could reach 30 percent because of more generous payouts and stock market losses.
Campbell, a candidate for Pennsbury School Board, called it "a bailout to teachers."
"Given what's coming in a couple of years, school boards should be doing everything they can do now because when that mandate comes down it's going to get passed right on to homeowners."
Besides the pension spike and shrinking index, districts face the loss of the exceptions that allowed them to raise taxes above the index to pay for things like health care costs and building renovations. But once current contracts run out, so do the exceptions.
"There are several things happening that will make it tricky to maneuver in the next couple of years," said David Matyas, business administrator for Central Bucks. "Ultimately, you have to talk about people and programs.
"If you need a new roof, maybe you put a bucket underneath the roof. Hopefully the economy will come back like gangbusters."
