Act 1 exceptions could come soon, future forecasts coming into focus

LANSDALE >> Word should come next week on whether the North Penn School District qualifies for a tax increase higher than allowed by state law, and the forecast farther out is coming into focus.

Director of Business Administration Steve Skrocki reported Thursday night on the status of the district’s current application for two exemptions from the state’s Act 1 index, and future figures projected by the state.

“We did apply to the Pennsylvania Department

of Education on March 5, and PDE was back in contact with us to make a few revisions,” Skrocki said.

“Their final decision on our referendum exception request will be rendered by the 27th of March,” Skrocki said.

Talks started in February on the first draft of North Penn’s proposed 2019-20 budget, with expenses at roughly $275 million and a deficit of roughly $14 million in projected expenses over revenues. The state’s Act 1 of 2006 limits the maximum possible tax increase allowed without a referendum, and for 201920 the Act 1 index has been set at 2.3 percent.

North Penn’s business office have projected a tax increase at that 2.3 percent Act 1 index would add roughly $4.1 million in new revenue, and the district could also qualify for two exceptions from Act 1: one for special education costs that could bring in $1.56 million more, and a second for retirement costs that could add just over $48,000.

The 2.3 percent tax increase would mean an $87 increase in taxes paid by the average district resident, and adding the two exceptions would total a 3.19 percent tax increase or a $121 increase over current levels.

Staff have also said the budget deficit could shrink via an anticipated $1 million in savings from employee retirements, $2.6 million from budget variances as revenues and expenses are finalized, and $1.5 million in transfers from reserves. In February the board voted unanimously to apply for the state for the two exceptions, with talks on whether to use them to continue for the next three months before the final budget is adopted in June, and earlier this month Skrocki said the application had been formally submitted to PDE.

“Just to reiterate once again, just because you apply for exceptions doesn’t mean you use the exceptions,” Skrocki said.

“This is really the first stage, to determine if we’re even eligible for exceptions, and that will be determined by the board as part of the budget process,” he said.

Skrocki added that the

state’s Independent Fiscal Office has also updated their projections for where the Act 1 index will be set in several upcoming years.

“They did issue four additional years in their Act 1 projections. Unfortunately, they’re pretty low,” Skrocki said.

For the school year that starts in 2020 and ends in 2021, the new project is that the Act 1 index will be 2.3 percent, the same as for the 2019-20 school year, Skrocki told the board. The projected index for 2021-22 is now 2.8 percent, for 2022-23 is 3.0 percent, and for 2023-24 is 3.2 percent, which are all down slightly from earlier estimates, Skrocki said.

“We’ll amend our multiyear fiscal forecast to actually bring down some of the assumptions on the revenue side, as a result of that,” he said.

North Penn’s school board next meets at 7:30 p.m. on April 16 and the board finance committee next meets at 6 p.m. on May 7, both at the district Educational Services center, 401 E. Hancock St. For more information or meeting agendas and materials visit www.NPenn.org or follow @NPSD on Twitter.