Spend budget reserves before layoffs, tax hikes, Pa. House Republicans tell schools

Pittsburgh Public Schools has biggest fund balance

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HARRISBURG -- A pair of House Republicans are calling on school districts to spend down budget reserves before raising taxes or laying off teachers.

Speaking at the Capitol on Monday, Rep. Mike Vereb, R-Montgomery, and Rep. Mario Scavello, R-Monroe, said they are frustrated that districts across the state held more than $3.2 billion in reserves in June 2011, despite proposals now to lay off teachers and raise tax rates. And they pointed to the Pittsburgh Public Schools as a prime offender, a finding the district says ignores the rhythms of its off-cycle fiscal year.

"To be holding onto this type of revenue, still proposing additional tax increases and blaming us for not giving them enough money is ludicrous," Mr. Vereb said of the state's school districts. "The people on these school boards that are holding onto these pots of money need to come clean with the taxpayers that they are about to jump into their pockets and raid one more time."

Mr. Vereb said later he is working on legislation to bar districts from raising tax rates if their reserve funds exceed 5 percent of their operating budgets.

The legislators stood beside a poster highlighting Pittsburgh as the Pennsylvania school district with the largest fund balance -- $148 million -- as reported to the Department of Education at the close of the 2010-11 fiscal year. The display notes that Pittsburgh Public Schools plans to lay off about 500 workers, including 350 teachers.

But the district argues this comparison is misleading because Pittsburgh, unlike most Pennsylvania school districts, budgets for a fiscal year that runs from January to December, rather than July to June. Ebony Pugh, a spokeswoman for Pittsbugh Public Schools, said that means a June reading shows the balance sheets after the district has collected most of its property taxes but before it has moved the money to pay its bills.

Rather than $148 million, the district budgeted a 2011 year-end balance of $64.5 million, or about 12 percent of its operating expenditures. That balance is projected to drop significantly in the next several years, according to the district, which estimates it will close out 2012 with $42.8 million, about 8 percent of the operating budget, and end 2013 with $29.9 million, about 5 percent of the projected operating budget, before shrinking further.

District policy calls for retaining a balance of at least 5 percent of the operating budget, and Ms. Pugh said the administration plans to meet that requirement through reductions to its central office workforce and changes in contracted services, supplies and travel.

The current year is the 11th in a row that the district has not raised its tax rate, she said.

Two years of surveys by the Pennsylvania Association of School Business Officials found that 70 percent of districts have used fund balances to balance their budgets, said executive director Jay Himes. He said government entities at every level maintain reserves to ensure against unforeseen events.

"It's the financially responsible thing to do," Mr. Himes said. "And frankly, if districts hadn't done it, we would have bankrupt districts today."

The Corbett administration is backing the call for school districts to spend reserves exceeding a certain level before raising taxes.

"These funds are intended for rainy days. It's raining," said Tim Eller, a spokesman for the Department of Education. "Instead of demanding more from local taxpayers, they should be using their savings accounts to reduce the burden on taxpayers."

A spokesman for the Pennsylvania State Education Association, the state's largest teachers union, said districts already are spending down their fund balances. But spokesman David Broderic said that won't fix what he calls a crisis in school funding.

"If it's not addressed soon, school districts' reserves will be gone long before the storm ends, and students will be the ones who suffer for it," he said.

education - electionspa - state

Karen Langley: klangley@post-gazette.com or 1-717-787-2141. First Published May 22, 2012 12:00 AM


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