Pittsburgh schools end 2012 with surplus, but tough times lie ahead
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Although Pittsburgh Public Schools started 2012 with a projected operating deficit of $21.7 million, the district finished the year with a nearly $7.1 million operating surplus.
The year-end result, contained in documents provided at a school board meeting Wednesday, was strong enough to change the district's projection of when it will run out of money.
Now, unless spending or revenue changes, the forecast calls for going broke in 2016, instead of in 2015.
The year 2016 is when the annual deficit in the general fund is forecast at $53 million, outstripping what is left by then of the fund balance, which was $85.9 million at the end of 2012.
The forecast calls for a $9.9 million deficit in 2013, $30 million in 2014 and $42.8 million in 2015. It does not account for any additional costs after the current teacher contract expires on June 30, 2015.
The school district, which operates on a calendar year, typically ends the year with a significantly smaller operating deficit than it budgeted.
In recent years, Pittsburgh has made deliberate efforts to trim costs, including reducing staff and increasing class size.
Some of those savings continue year after year, such as a reduction in the number of employees.
The district has gone from a total of 4,639 employees in the general fund budget in 2009, to 4,383 employees in 2010, to 4,231 employees in 2011 and to 3,770 in 2012 -- a decrease of 869 employees, or 18.7 percent, over that time.
"Some of the factors that contributed to the operating surplus in 2012 include a change in the timing of the collection of earned income tax, which requires the tax of city residents who work outside the city to be deducted from their paychecks.
"That resulted in the district receiving about $3 million earlier than it would have otherwise," said Pete Camarda, chief financial and operations officer.
Another $1.7 million also came from the new tax collection process, because people who used to fall through the cracks no longer do so with the paycheck deductions, he said.
The district also received about $3 million more in real estate tax than budgeted and saved nearly $1 million in natural gas bills, Mr. Camarda said.
The reduction in the number of teachers last fall resulted in about $3.4 million more savings in employment costs than budgeted because of the actual pay rates of individuals who left the district through retirement, resignation or furlough, he said.
Overall, the district spent $11.5 million less in 2012 than in 2011.
Some elements of the budget are unpredictable and budget planners try to hedge against uncertainty.
"How do you predict Marcellus Shale and its long-lasting effect on natural gas savings?" Mr. Camarda said.
He said other uncertainties are at hand, including an unknown state budget, potential pension reforms and the impact of federal sequestration.
Mr. Camarda doesn't want the successes to give a false sense of security.
"There's so much unknown," he said. "The unknowns of predicting cause you to be conservative and happy you can deliver for the public."
First Published March 22, 2013 12:00 am