Taxpayers in the Peters School District could be looking at a property tax increase next year, due to rising costs and stagnant revenues.
Members of the school board met Monday in a finance committee meeting to discuss the district's budget for the 2014-15 school year. Although the budget normally would be tackled in late spring for a June 30 deadline, districts that are considering higher tax increases must submit preliminary budgets to the state Department of Education in February.
No decisions were made Monday, but business manager Vincent Belczyk said the board should vote in late January about whether to seek exceptions to a state-mandated cap on tax increases.
The district next year will be limited to a 2.14-mill property tax increase unless the state grants it exceptions for the cost of special education and rising retirement costs.
The board reviewed three scenarios Monday, each based on a total spending plan of about $57 million.
If the district keeps the tax increase within the index, it could balance the budget with a $1.5 million contribution from its $18.9 million fund balance. To balance the budget without assistance from the fund balance, the district would need to raise taxes by 4.58 mills. If there is no tax increase, revenues would fall short of expenditures by about $2.26 million.
The current tax rate is 102 mills, the second lowest in Washington County. Each mill generates about $335,000 for district coffers, and each mill costs taxpayers an average of $100 for each $100,000 of assessed value. A 2.14-mill increase would raise taxes by about $214 per year on a $100,000 house.
The major cost drivers in next year's budget will be expenses related to staffing, special education and debt service -- "all things the district has very little control over," Mr. Belczyk said.
Other increases are expected for cyber school tuition, along with an additional $100,000 for new math curriculum and increased transportation costs of 3.26 percent, or $28,000.
"We're very limited," Mr. Belczyk said of the cyber school option. "At any point, a parent can pull their child out. We're kinda stuck paying the tuition rate."
The district currently pays about $450,000 per year to educate more than 70 cyber school students, and that number is expected to increase next year by about $100,000, Mr. Belczyk estimated, based on continued cyber school enrollment increases. Home districts are obligated to pay cyber school tuition for students, minus costs for items such as transportation.
The financial data was a reality check for three new school board members, who joined the board two weeks ago.
New member Lisa Anderson questioned whether the district could prevent some students from leaving for cyber school. Superintendent Jeannine French said the district tries to dissuade students.
"They don't leave without some effort," Ms. French said. "We don't want to harass people."
Staffing costs are expected to rise by more than $3.3 million next year, Mr. Belczyk said, due to mandated staff and contractual obligations.
The district has maintained one of the lowest per-pupil costs in the state at $11,203 per student -- ranking 461 out of 500 districts statewide.
The district has been seeing a slow but steady decrease in enrollment in recent years, with a loss of 161 students districtwide since 2010. By 2021, administrators projected the district would lose about 45 more students, depending on growth in the township, which is about 65 percent developed.
New member Jamison Hardy questioned the projections, saying one or two new residential developments in the township could impact enrollment futures.
"It takes two building plans and your enrollment goes up," he said.
Ms. French said the district is constantly monitoring its enrollment and uses historical data to predict future population.
Retirement costs are among the biggest factors in the budget, predicted to rise to more than $3.1 million next year -- an increase of $680,648 over this year. The district's retirement contribution will increase to as much as $5.3 million by 2021.
The pension liability crisis has been felt statewide, with dramatic increases due to market losses and contributions that were too low in previous years.
The district has set aside $4.8 million to prepare for the ongoing crisis, but smaller and poorer districts are likely to feel the impact much more acutely, Ms. French said.
"It's probably going to take a critical mass of school districts going belly up before there's reform that's fair," she said of legislative relief for pension costs. "We're in much better shape than others."
Health care costs are projected to increase by about 2.5 percent next year, and special education costs continue to rise while state subsidies have remained flat, Mr. Belczyk said.
"Pretty much now everything is frozen in the state," as far as additional funding, Mr. Belczyk said, leaving local districts to make up the revenue or slash costs.
As a result, "every one of our school budgets is going to be higher," than the previous year, Ms. French said.
Ms. French said she hopes to gain more efficiencies before trimming programs becomes necessary.
The board is expected to vote Jan. 21 on a preliminary budget and whether to seek an exception to the state-mandated cap on tax increases.
Janice Crompton: firstname.lastname@example.org or 412-263-1159.