District plans tax hike, anticipates budget deficit

Official: Costs may continue to decline

The Moon Area School District plans to raise the property tax rate by 0.7452 mills in 2017-18 to fund a budget that it anticipates will have a deficit of $4.4 million.

The school board is scheduled to vote June 26 on a final budget that, as of now, is projected to have $74.5 million in revenue and $78.9 million in expenditures. Keith Bielby, director of fiscal and school services, noted that revenue is difficult to project because the state has yet to approve its final budget.

If the tax increase is approved, it would mean the owner of a property with the district’s median value of $160,000 would pay $119 more a year in school district taxes, or about $10 a month. The new rate would be 20.3028 mills.

“This is a little lower than the preliminary school budget we presented in January,” Mr. Bielby said of the district’s expenditures. Costs were reduced by about $600,000 through contract renegotiations.

“We are continuing to work on negotiations, so this is still going to be a moving target. By the time I revisit this at the end of June, I anticipate this number may come in a little lower,” he said.

For the current school year, the district is reporting a deficit of nearly $1.5 million, which Mr. Bielby noted is lower than the $5.3 million deficit that had been anticipated for 2016-17.

“That is actually $3.8 million better than what we projected, so we have done some work,” he said at the May 22 school board meeting. He attributed the progress to PlanCon payments from the state, which help offset the costs of school construction, plus the district’s budget freeze and additional cuts.

Also, the board took out an $8 million bond. It used the borrowed money to cover the 2016-17 deficit and designated the approximately $6.9 million that remained as a fund balance.

Once the projected $4.4 million deficit for next year is subtracted from the $6.9 million, the district will have a projected fund balance for 2017-18 of almost $2.5 million.

Mr. Bielby discussed challenges that the district faces, such as payments to the Public School Employees Retirement System, or PSERS.

He said the increase in those payments is going to cost the district about $746,114.

“That is just the increase,” board member Jerry Testa noted.

“The problem all started with the state. They’re not bailing us out, they are just dumping it on the local school districts, saying, ‘Raise taxes to pay for the increase,’” board member Mike Scappe said.

“It’s the unfunded balance, which is roughly about $49 billion, that is the problem,” Mr. Testa said. “Any of the fixes — such as converting new employees to a 401(k)-type pension — does not provide any relief until 35 years down the line. As a matter of fact, it makes the problem more costly because you have less people paying into the system.” He said PSERS is unsustainable.

“This isn’t teacher greed. This is about mismanagement of a fund,” board member James Bogatay said. “Teachers are public servants. Their salaries are fixed. This is a business problem, not an educator problem.”

The two biggest increases in the district budget are salary and benefits. “Those are not costs we can control because of contractual agreements, PSERS and other health care increases,” Mr. Bielby said.