Workshop coming as budget vote looms

District officials say they’re still trying to cut anticipated deficit

LANSDALE >> The 2017-18 budget for the North Penn School District continues to take shape, and residents will have several chances to have their say before the spending plan becomes official.

The district’s finance committee will hold a special meeting at 6 p.m. on May 4 to present the budget to the public ahead of the board’s next work session on May 9.

“That is really going to be our last shot at fine-tuning the budget before presenting it to the board. On May 9, we’ll be asking the full board to adopt the proposed final budget,” Director of Business Administration Steve Skrocki said.

Skrocki and Finance Committee Chairman Frank O’Donnell reported to the school board Thursday night on the latest district budget talks. In November the board voted to stay within the state’s Act 1 index, which sets a limit of a of 2.5 percent tax increase the board could approve without a referendum, and O’Donnell said staff still intend to stay under that limit as they’ve heard details of each district department.

“Between the last regular meeting and the special meeting, a total of nine department budgets were presented to the community, by the responsible administrator,” O’Donnell said.

“We reviewed the future obliga-

tions for the pension plan, and recommended utilization of part of the district’s $14.4 million remaining fund balance for pension obligations,” he said.

That $14.4 million is currently held in a rate stabilization fund that was created for the purpose of paying down future pension expenses, Skrocki said, and his department will recommend using at least part of that fund in 2017-18.

“Money was put in for a period of about five years, and nothing has been drawn down from that, so in ’17-’18 we’re planning on starting to draw that

down,” Skrocki said.

Total outstanding debt obligations did increase slightly in 2017-18 thanks largely to a bond borrowing the board approved in December to fund several projects, including renovations to Montgomery Elementary School. In March, Skrocki said early estimates were that keeping taxes at current levels would produce a deficit of roughly $14.6 million, while a tax increase to the Act 1 level would produce $4.2 million in new revenue and leave a $10.4 million deficit.

“We still have a pretty large deficit at this point in time, so we’re trying to balance the budget, and trying to minimize any tax increase, the best we possibly can,” Skrocki said.

“We definitely have some difficult financial challenges, but we’re working hard, and finetuning the budget every day, and we’re hoping we can deliver a balanced budget with a minimal tax increase. We’re certainly hoping it will be less than 2.5 (percent),” Skrocki.

Another hit to the district’s bottom line has already been factored in: the new owners of a property in Upper Gwynedd formerly owned by Merck have now received a considerable drop in its assessed property value, from the previous $36 million down to a new assessed value of just $2 million.

“That’s a huge impact to the school district. The

taxes that were paid this past year were based on the $36 million, and the taxes that will be paid next year will be based on the $1.1 million, or $2 million,” Skrocki said — “that’s close to a $700,000 loss of revenue to the school district.”

If the building is redeveloped and occupied again, the district can challenge the reduced assessment and seek a higher value, but there is no guarantee the district will ever regain that revenue, Skrocki said. Each year, the district’s tax base grows at an average of half a percent through new developments and investments on current properties, and Skrocki said the reduction on that one property

could wipe out that normal growth for the year.

“Now, with that reduction, our tax base won’t be growing. It’s basically flat, that completely removes the natural growth, just like that, and that’s a huge budgetary impact,” he said.

New residential developments may seem like a boon for the district, but each new student costs an average of roughly $14,000 per year for the district to educate, based on statistics from the Pennsylvania Department of Education.

“If just one student comes out of just one of those properties, we lose money. It costs $14,000 to educate one student, but one property doesn’t generate $14,000 worth of tax

revenue,” he said.

Large commercial taxpayers like Merck or the Montgomery Mall allow North Penn to keep its taxes relatively low, Skrocki said, and he and O’Donnell encouraged the public to attend the upcoming meetings to learn more details and specifics.

“Those are some of the things we’re being faced with this year with our budget,” O’Donnell said.

North Penn School District’s Finance Committee next meets at 6 p.m. on May 4 and the full board next meets at 7:30 p.m. on May 9, both at the district Educational Services Center, 401 E. Hancock St. For more information or meeting agendas and materials visit www.NPenn.org.