Budget may exceed tax cap
ROYERSFORD >> The Spring-Ford Area School Board has unanimously and without comment adopted a $171 million preliminary budget for the 2019-2020 school year.
The decision, as well as a motion authorizing the administration to exceed the state-imposed tax hike cap of 2.2 percent, came as part of a single vote at the Jan. 28 meeting that included a total of nine financial matters.
According to the night’s agenda, the exact preliminary budget amount is $170,897,412.
The current deficit projection is $4.5 million and could require a 4.2 percent tax hike to close.
The same vote also authorized the administration to seek “exceptions” to a 2.2 percent tax hike cap imposed by Act 1. That law allows districts to adopt preliminary budgets in February and seek “exceptions” to the cap for certain purposes.
“Exceptions are permitted due to the recognition that there are extraordinary district expenses above the rate of inflation,” according to the district.
In Spring-Ford’s case, the district may cite $2.4 million in special education spending and $25,000 in payments to the PSERS state education retirement system, which, taken together, could add another 2.2 percent in expenses to the proposed budget.
Some school boards, such as Pottstown and Pottsgrove, forgo the exercise of putting together a preliminary budget when so many estimates are too early to be accurate by adopting a resolution to that their final budgets will not raise taxes beyond the Act 1 tax cap, known as an “index.”
The preliminary budget was last discussed publicly at the Nov. 18 school board meeting at which Chief Financial Officer James Fink gave a presentation on the subject.
The board voted to make the budget available for public inspection on Nov. 26.
During the Nov. 18 presentation, Fink said the increase in PSERS payments is a 4.1 percent increase, which adds about $1.5 million to the expense side of the preliminary budget.
On the expense side of the ledger, the preliminary budget forecasts an increase of $6.5 million or 3.92 percent and about 85 percent of that increase is caused by increases in salaries and benefits, Fink said.
“Not really a surprise, but I wanted to point that out,” said Fink. “That’s where the big numbers are.”
And part of the increased spending will be offset by a 1 percent increase in revenues, driven largely by the increased property assessments in the Spring-Ford housing market, adding $880,000 to the bottom line, and a $400,000 increase in the delinquent property tax line.
He told the board that the $4,456,260 deficit exists after $4 million in reserve fund balance is used toward closing the $10.1 million gap between revenues of $160.7 million and projected expenses of $170.9 million.
As more data becomes available, the budget will be refined and a final proposed budget will be presented to the school board on April 15, Fink said.
The board will vote on April 25 to advertise that final budget, but final adoption will not occur until May 28, according to the schedule Fink presented.