Budget draft: 3% tax hike, $6.6M gap

FRANCONIA » The first look at what will become Souderton Area School District’s 2021-2022 budget is a starting point with a lot of work remaining before a final vote in June, district officials said at the board’s Jan. 13 Finance Committee meeting.

That starting point increases property taxes by 3 percent, this year’s state cap, along with showing almost $6.6 million more expenses than revenue, Director of Business Affairs Brian Pawling said.

A three percent tax hike would be the largest in years for the district which increased taxes .91% for the 2020-2021 budget and has only had a tax hike of more than 1 percent twice in the past seven years.

Although there were concerns the economic consequences of the pandemic would cut the amount of local tax money received, the numbers are coming in better than expected, Pawling said.

“Our earned income taxes are right where they were last year, if not a little bit ahead,” he said. “Real estate transfer taxes are strong because of low interest rates. People are buying properties.”

At this point, the district would normally have totals for how much was paid in property taxes by the end of the year deadline, but that’s not the case this year because payments that were postmarked Dec. 31 are still arriving, he said.

The budget is currently projecting that federal and state funding for the schools will not increase for the coming year, but that could change, he said.

A 3 percent tax hike would bring in $3.5 million more for the district, but expenses are currently pegged to increase by $7.8 million, from this year’s budgeted $132,996,595 to $140,820,899, Pawling said.

The majority of the increased expenses are in seven categories, which account for a combined $7.2 million increase, he said. The projected increases are $2,866,105 for salaries, $1,220,276 for pensions, $624,508 for health benefits, $1,528,207 for technology, $548,659 for special education, $197,125 for curriculum/instruction, and $256,077 for charter school tuition.

The salary-related costs in the proposed budget do not take into account any retirements, so those numbers could decrease, Pawling said.

Payments to employee pension funds, which are set by the state, will be 34.94 percent of the amount paid in salaries in 2021-2022, Pawling said. That puts the amount the district will have to put into the pension funds at $20,459,619, he said. Ten years ago, the rate was 8.65 percent and the district had to pay $4.2 million, he said, illustrating the increasing pension costs. The state reimburses school districts for half the pension costs, he said.

The school district pays more than $4 million per year in tuition for charter school students, he said, and there has been an increase this year in the number of district students enrolled in cyber charter schools.

The tuition paid is the same, regardless of whether the charter school student is enrolled in a brick and mortar charter school or a cyber charter school. The rate for Souderton Area students enrolled in a charter school is $13,088.69 for regular education students and $32,918.82 for special education students, Pawling said in answer to an emailed question for this article.

Districts with their own cyber school programs, however, have shown that the costs are much less than the rates set for the cyber charter schools, Superintendent Frank Gallagher said. The district’s cost for its Souderton Area Online Academy cyber program is $2,000 to $3,000 per student, he said.

“It has to stop. If we can do it for two or $3,000 properly, there’s no reason we should be paying what I think are exorbitant rates,” board President Ken Keith said later in the meeting.

Souderton Area and other districts across the state are asking that the state formulas for funding charter schools be reformed.

While special education costs continue to increase, state funding to reimburse the districts has changed little, Pawling said. A graph showed the district’s special education costs at around $16 million per year, with the state reimbursing about $5 million.

The Finance Committee is scheduled to meet again Feb. 10, March 10, April 14, May 12 and June 2. The full board is scheduled to vote on the proposed budget April 29, with final budget approval coming at the board’s June 17 meeting.

The current property tax rate in Souderton Area School District is 30.32 mills. For a home assessed at $156,110, the district median, the school district tax bill is $4,733.26. Each mill equals $1 of tax per $1,000 of assessed property value.