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School groups warn of 'financial chaos'
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Pennsylvania's recession-battered school districts face "financial chaos" and some might not survive if legislation passes requiring voters to approve any tax increase above an inflation index, two schools groups warned Wednesday.
The Pennsylvania School Boards Association and Pennsylvania Association of School Business Officials spoke as one of two bills intended to eliminate Act 1 exceptions faced a possible state House vote. Action on House bill 1326 later was postponed, but its supporters say they expect it to occur within three weeks.
Act 1 of 2006 mandates that districts cap tax increases at an index established by the state Department of Education or face a referendum, except for 10 specific exceptions to offset cost increases tied to special education, pension obligations, construction debt, court or agency mandates and several other cost drivers.
The Education Department index is pinned to average wages and the federal employment cost index for schools. Currently, the index ranges from 1.4 percent for wealthier districts to 2.3 percent for poorer districts, with Pittsburgh's in between at 1.7 percent.
House Bill 1326 and Senate Bill 911 were introduced amid growing public displeasure with rising taxes in a bad economy.
David Davare, director of research for the school boards association, told reporters in a conference call that the notion that exceptions enable irresponsible spending is false. Both groups argue the exceptions are used sparingly and that without them, schools facing fast rising costs would be hemmed in at a time when state, federal and local revenues are down.
They warned of program cuts from academics to student support to athletics and said more schools would impose pay-to-play charges for some activities.
They said poorer districts would face particular peril.
"We have significant concerns in terms of some school districts and their finances, particularly the tax-base-poor districts," said Jay Himes, executive director of the business officers association, mentioning several districts by name, including Clairton and Duquesne in Allegheny County. "There's a real question in whether or not they will make it out of this recession in any condition."
Mr. Himes said one result might be mergers, but he added, "Who wants to merge with a bankrupt school district?"
The groups said ending Act 1 exceptions would put strapped districts before voters hostile to higher taxes.
In Clairton, for example, the school board put a tax hike to a referendum in the primary when it feared it would not get its exceptions from the Education Department. Voters easily rejected the tax hike, 895-158, according to county elections website. The district ultimately received the exceptions.
Rep. Seth Grove, R-Dover, leading sponsor the House bill 1326, said many districts have not looked at their own finances to save money said that his bill reflects the public's wishes that districts "stop doing tax increases."
First Published May 26, 2011 12:00 am
