Board mulls $2.3M surplus

Don’t you hate when your accountant calls and tells you there is $2.3 million in your piggy bank you didn’t expect to have?

That’s the situation facing the Pottsgrove School Board as its members try to decide what to do with the surplus it didn’t know was coming.

Business Manager Dave Nester explained to the board during the Oct. 24 meeting that a number of unexpected circumstances conspired to created the surplus.

Perhaps the largest share of the blame goes to Harrisburg and its inability to pass an ontime budget in the 2014-2015 school year.

Nester said the budget that finally passed included $750,000 from the state as part of partial reimbursements for construction projects at Ringing Rocks Elementary School and Pottsgrove High School.

But because the state was planning on borrowing to provide the PlanCon money, as its

called, he did not expect it to come that year — and it didn’t — so he didn’t put it in that year’s budget.

However, a year later a consensus was reached among accountants statewide to budget the PlanCon money in the previous year anyway.

Then, in the 2015-2016 state budget, which did not raise local taxes, Pottsgrove ended up receiving $400,000 more in state aid from Harrisburg than it had expected when the budget was built.

So that’s already more than $1.1 million than expected and then special education subsidies arrived higher than expected as well.

Local revenues also come in higher — about $1 million higher.

Nester said earned income and real estate transfer tax revenues were higher than anticipated; health care costs came in slightly below budget and utility costs were low.

With $310,000 in savings and $110,000 less in utility costs — pretty soon you’re talking about real money.

Additionally, transportation costs were also low because of low gasoline costs, and because the staff moved several special education students either back into the district from distant special schools, or to special schools closer to Pottsgrove, Nester said.

Having $2.3 million more than you expected might sound like a nice problem to have, but its still a problem — Nester explained — particularly in light of the recent ruling in which a judge revoked a tax hike in Lower Merion School District because its surplus was too high.

Over the last four years, Pottsgrove has maintained a surplus on the low end of the recommended range — about 1.5 percent, said Nester.

The additional $2,350,000 puts that at 5.5 percent. If a projected fund balance exceeds eight percent, state law does not allow a district to raise taxes that year, said Nester.

School Board President Rick Rabinowitz, who had argued for no tax hike the year the board voted to raise them by .55 percent, now argues that some of the surplus should “go back to the taxpayers.”

But after the logistics of cutting what Nester referred to with some horror as “17,000 $25 checks,” the board agreed the best way to return money to taxpayers — if that is the decision — would be to put a portion of the surplus toward reducing taxes in next year’s budget.

But other than a unanimous vote to “recommit” $375,000 set aside last year to offset PSERS retirement increases which was never used to the same purpose in the coming budget, no decisions have been made yet.

Nester reminded the board that a capital needs presentation recently identified $15 million in needs, including new roofs for the middle school — $3.3 million all by itself — as well as possibly Lower and West Pottsgrove elementary schools.

The capital reserve budget is at about $7.3 million now, said Nester.

However, a motion by Rabinowitz to put $1.5 million into the capital reserve was tabled by the board.

Board member Robert Lindgren pointed out that “no matter what decision the board makes, people will complain. No good deed goes unpunished.”

Both he and board member Bill Parker suggested the board consider putting some of the excess money toward programs to improve education.

Lindgren said education should be the board’s top priority and Parker — who is not prone to suggesting the district spend more money — said perhaps it should be put toward raising what he characterized as the district’s “unacceptably low” standardized test scores.

The next school board meeting is Nov. 15.