$125M budget will hike taxes 2.6%
SOUTH COVENTRY » The Owen J. Roberts School Board has voted unanimously to adopt a $125.5 million proposed budget for 2020-21 that will increase property taxes by 2.6 percent.
The budget plan, which represents a 3.5 percent increase in spending, will increase by $153 the annual tax bill of property assessed at $184,195, the district average assessment, according to the budget posted on the district website.
The proposed tax hike, which still requires another vote by the board, is the maximum allowed by the state’s Act 1 index, which capped the district’s tax hike at 2.6, unless a larger one is approved by voters.
According to the budget, for the last five years Owen J. Roberts has raised taxes by the maximum allowed by the state and, in two of those years, more than the maximum using “exceptions” for higher tax rates written into the Act 1 law.
Consequently, in those same last five years, the tax bill on the average assessment in the district has gone up by $581 according to the budget.
The budget also indicates that Owen J. Roberts currently has the third highest millage in Chester County, behind only Coatesville and Octorara, however it ranks eighth among the county’s 11 district when it comes to the total assessed value of its properties.
Many might argue that the taxpayers are getting their money’s worth. Owen J. Roberts has a graduation rate that hovers around 90 percent and standardized test scores far above the state average.
In January, the school board pledged to keep the tax hike at the index or lower. But that was before the coronavirus pandemic upended all financial assumptions about the year to come.
As MediaNews Group reported May 1, a statewide organization of school business administrators warned of steep revenue losses in local revenue between $850 million and $1 billion depending on how quickly the economy bounces back
from the restrictions.
According to the estimate by the Pennsylvania Association of School Business Officials, Owen J. Roberts stands to lose between $4.4 and $5.2 million in the coming school year due to the coronavirus shutdown.
More than 78 percent of the budget comes from local sources, the largest of which is the property tax, which generates nearly $75.5 million of the budget’s revenues.
“Real estate taxes, transfer taxes, earned income taxes and investment income alone are projected to decrease by $2.5 million from January 2020 projections for the 2020-21 fiscal year,” Owen J. Roberts Superintendent Susan Lloyd told MediaNews Group for the May 1 report.
“Flat property assessment values, potentially decreasing collection rates, increasing unemployment rates and a significant cut in short term investment rates all contribute to the projected revenue loss for next year,” said Lloyd.
“The fast COVID-19 economic decline also presents challenges for the state and additional uncertainty surrounding the state’s funding for school districts. In addition, there is no relief to school districts for state mandated cost increases, such as charter school tuition and special education required services, which are increasing by approximately $400,000 for next year,” said Lloyd, echoing language which now appears in the proposed budget.
“With a modest tax increase, we anticipate a potential budget deficit of almost $4 million over the next three years even if there is a quick turnaround in the economy,” she wrote to MediaNews Group.
Primary drivers of the increase in spending is a 2.05 percent increase in the salary line and 3.74 percent in the benefits category. Salaries comprise more than 43 percent of the budget’s expenses and benefits comprise more than 27 percent. when combined, that represents more than 69 percent of the total budget plan.
The price of providing special education services also continues to rise, according to the budget.
“In addition to the significant economic impact of the COVID-19 pandemic, mandated costs are the second most challenging aspect of budgeting,” according to the budget narrative.
“School districts have limited flexibility in controlling these costs, for example, when students require special education services, such as private placements or transportation, the district must absorb the cost,” according to the budget.
“The district’s special education population has been increasing each year resulting in a corresponding increase in costs. State subsidies are estimated to cover only 11.8 percent of the budgeted special education costs,” according to the budget.
According to the budget sent to Harrisburg, Owen J. Roberts has $10 million in reserves. Of that, $6.6 million is “unassigned,” representing just over five percent of the total budget, which is on the low side of fiscal recommendations.
It is also below the 8 percent limit the state places on unassigned fund balances in districts that have expenditures above $19 million that plan on raising taxes.
Before voting on the budget on May 18, the school board heard from East Vincent
resident Denise Wilson who said “if you are going to pass a budget that raises taxes and cuts programs, you need to do better.”
The budget proposal will raise taxes on seniors “when they are being hit the hardest,” Wilson said.
The final budget vote is scheduled for the June 15 meeting.