Act 1 exceptions approved
Approval could lead to larger tax increase; budget talks to continue into June
LANSDALE » As talks continue on the North Penn School District’s 2018-19 budget, another part of the financial picture has gotten clearer.
“We learned today that the Act 1 referendum exceptions, for which the school district applied, were approved today by the Pennsylvania Department of Education,” said Director of Business Administration Steve Skrocki.
“They totalled $1,781,977, and that was spread between special education and retirement, so the board and the district has been approved for use of the referendum exceptions,” he said.
Starting in January, the school board and fiance department staff have discussed at length their options and outlook for the 2018-19 budget, which initially showed a preliminary deficit of roughly $9.7 million, due largely to growing salary and benefit increases. Before calculating any potential tax increase, staff projected next year’s revenues to total $250.9 million and expenses at $260.6 million, leaving the $9.7 million gap between the two.
During a series of finance committee meetings throughout the past three months, Skrocki has outlined the board’s options: the state’s Act 1 of 2006 sets a limit of 2.4 percent by which the board could increase its local taxes in 2018-19, and finance department
projections have said that a 2.4 percent increase would generate roughly $4.1 million in new revenue. Adding the exceptions would generate that additional $1.7 million and bring the total tax increase up to roughly 3.4 percent, and the board voted in February to authorize finance staff to seek the state approval that has now been granted.
Doing so, Skrocki told the board Thursday night, would add an extra $37 to the increase for the average district taxpayer: based on a median homestead assessed value of $143,000, the Act 1 increase of 2.4 percent would raise their current tax bill by $87, and adding the exceptions would bring the total increase to $124.
“The use of the exceptions would result in a $37 increase for the average homestead for the entire year. On a millage basis, it’s an additional .248 mills, so basically an additional one percent in taxation,” Skrocki said. Any tax increase would need to be approved by the board when the final budget is passed, likely in June.
Starting with the $9.7 million deficit, and adding in the roughly $5.9 million in new tax revenue would leave a shortfall of just below $4 million, and during a series of finance committee meetings held over the past month Skrocki has given updates on other projected expenses and revenues that are coming more into focus as next year nears. Finance committee chairman Ed Diasio said Thursday that medical expenses are now projecting to come in at $734,651 lower than had been expected next year, which could help further narrow that gap.
“The second look rates (for medical expenses) are 3.38 percent lower than the first look rates, and I’ll note that the first look rates were even lower than the prior year, so we’re saving quite a bit of money in this regard as we head into next year’s budget,” Diasio said.
Staff are also expecting roughly $1 million in savings from staff retirements and the corresponding reductions in salaries and benefits, and finance department staff expect a drop in workers compensation expenses, and Skrocki has said staff could recommend the use of at least some reserve funds to close the remaining deficit.
For the current year’s 2017-18 budget, Skrocki said, a projected deficit of roughly $4.5 million that was anticipated when the budget was approved last summer has closed to virtually zero, thanks largely to increased tax revenue and higher investment income.
“The one item that stands out is our investment income: we’re 200 percent higher this year, compared to last year, which generated approximately $600,000 more than budgeted. That’s really good news,” Skrocki said.
The school board voted unanimously to approve monthly disbursements for February totalling roughly $28.1 million, and Skrocki said that monthly figure was considerably larger than any other month this year due to a $13.4 million payment on debt service made during the month.
“We make our principal payments in February, and half of the interest payments for the year come in February, so $13.4 million of the 28 is a result of debt service,” he said.
With those payments approved, the district’s total available fund balance adds up to $127,101,228.24, a number Skrocki said “represents about a $5.5 million increase in our position, compared to February 2017.”
Reports on various departmental budgets will continue during finance committee meetings in April and May, and the district is currently scheduled to give preliminary approval to a final budget on May 17, and formally adopt it on June 21.
The North Penn School Board next meets at 7:30 p.m. on April 10 and the finance committee next meets at 6:30 p.m. on March 26 and at 6 p.m. on April 5. All meetings will be held at the district Educational Services Center, 401 E. Hancock St. For more information or meeting agendas and materials visit www. NPenn.org.