Staff recommend tapping reserves
The 2018-19 budget for the North Penn School District continues to take shape, and two school board meetings next week should bring even more clarity to the financial picture.
Finance committee chairman Ed Diasio reported last week that the board and staff are nearing a final budget, and could tap certain district reserves to help make up a projected shortfall.
“The recommendation for the 2018-19 year is to use $1.7 million of these committed funds to offset the budget deficit,” said Diasio.
Since 2018 began, the board and the district’s finance department have discussed their options for the 2018-19 budget, which initially showed a preliminary deficit of $9.7 million due to growing salary and benefit increases, with expenses projected at $260.6 million and revenues at $250.9 million before any potential tax increase is included.
Over the past three months, staff have outlined the options for the board to balance that budget: the state’s Act 1 of 2006 sets a cap of 2.4 percent for the board to increase its local taxes in 2018-19, and district staff project a 2.4 percent increase would generate roughly $4.1 million in new revenue. Two exceptions to that Act 1 cap have been approved by the state, and would gen-
erate an additional $1.7 million and bring the total tax increase up to roughly 3.4 percent over current levels.
In the finance committee’s March meeting, staff outlined North Penn’s projected future expenses for PSERS, the Pennsylvania Public School Employees’ Retirement System, and the amounts set aside in a district reserve fund to help cover those costs. As of the final 2017-18 budget, the district
had $16.9 million in a rate stabilization fund set aside for future PSERS expenses, and used roughly $1.19 million of that fund to make up the annual increase in PSERS expenses for that year, leaving a balance after the drawdown of $15.7 million.
Doing so again for 201819 would require a draw down of an additional $1.74 million from the rate stabilization fund, and after another drawdown the balance would drop to $13.9 million. Early projections for 2019-20 would see that number increase once more to $2.37 million in reserves needed to balance the budget that year, a projected $2.414 million needed in 2020-21, then decreasing amounts each year after.
Those projections are all based on an assumed 2.75 percent salary growth per year, net of retirements and new positions, and the overall financial outlook could also change elsewhere: Diasio said the district’s total insurance bill will see a decrease next year.
“The 2018-19 premium will be approximately $300,000 less than the current year, due to reductions in workplace accidents and other incentives,” he said.
More good news has come in regarding the current year’s budget, Director of Business Administration Steve Skrocki told the board: thanks to higher than expected tax revenues, the roughly $4.5 million deficit included in the 201718 budget has been more than made up.
“We’re projecting about a $500,000 surplus for the end of the year, so that’s about a $5 million positive variance we’re projecting for the end of the fiscal year. That’s certainly good news,” Skrocki said.
The full school board is scheduled to meet twice next week in its capacity as the finance committee, at 6;30 p.m. on April 30 and at 6 p.m. on May 3, both at the district Educational Services Center, 401 E. Hancock St.