The Mt. Lebanon school board gave district administrators a clear directive on Monday: Find a way to lower property tax increases for the upcoming school year.
The board earlier approved $98.9 million preliminary budget for 2017-18 that calls for a property tax increase of 0.83 mills, but administrators have since lowered the anticipated increase to 0.54 mills.
“We’ll continue to review the budget and staffing needs,” superintendent Timothy Steinhauer said. “We’re in the infant stages of our budgeting process.”
Mr. Steinhauer said nearly 90 percent of the district’s expenses are tied to mandatory spending, such as teacher salaries and benefits.
While the student population has grown this year by about 1.7 percent, the staff has been reduced by 3 percent.
About 0.28 mills of the increase, or $15 million, is earmarked for increases in state pension funding. Those costs are expected to spike next year by nearly 6 percent.
Health care costs are also projected to rise 1.9 percent next year.
The state’s Act 1 index limits the district to a tax increase of no more than 2.5 percent -- or a new tax rate of 24.5282 mills.
A 0.54-mill increase would bring the total millage rate in the district to 24.47 mills.
Property owners have seen tax increases averaging 0.53 mills per year since 2006.
The board is expected to approve a final budget in May.
One possible way to lighten the burden may be refinancing $60 million in high school construction bonds, said district financial adviser Tim Frenz of Janney Montgomery Scott.
Mr. Frenz warned the board that a steady uptick in interest rates will cut into potential savings. Since he last spoke to the board about bond refinancing options on Feb. 27, Mr. Frenz said, the potential savings have dropped from an estimated $4.6 million to $4.1 million.
“When interest rates go up, bonds go down,” he explained.
Board members said they want to use as much of the savings as possible to mitigate future tax increases. They instructed Mr. Frenz to begin preparations for refinancing. Members are expected to vote on the issue at their Monday meeting.
“I would think that we need to act quick,” board member William Cooper said.
Janice Crompton: firstname.lastname@example.org, 412-263-1159 or on Twitter @janicecrompton.
CORRECTION: An earlier version of this story did not include the new proposed 0.54 mills real estate tax rate for Mt. Lebanon schools.