With $7.3M deficit, North Allegheny could look to nonprofits for revenue

| Wednesday, Dec. 25, 2013, 9:00 p.m.

Some North Allegheny school board members say it's time to consider asking tax-exempt nonprofits to chip in to help balance the district's budget, especially because a preliminary spending plan for 2014-15 is showing a $7.3 million deficit.

Board Vice President Tara Fisher is proposing payment-in-lieu-of-tax programs, agreements under which nonprofits and other organizations contribute to government entities.

“We've seen it work with other school districts, when there are nonprofit organizations that are within their borders,” said Fisher, one of three members who joined the board this month.

Several board members say the topic has come up before. District Finance Director Michael Hopkins gave a preliminary budget report last week, showing $144.6 million in expenses and $137.3 million in revenue for next school year.

The biggest increase: Repayments on bond debt related to renovations and other projects are set to rise from $7.8 million in the current school year to $20.2 million. Hopkins stressed state law requires a budget presentation in December, and the numbers will change significantly before a final budget is adopted June 25.

North Allegheny is Allegheny County's largest suburban school district, enrolling 8,257 students from McCandless, Franklin Park, Bradford Woods and Marshall.

Some of the large nonprofits within the district are La Roche College and UPMC Passavant, both in McCandless.

Alfred Maiello, the school district's solicitor, said the board should watch developments over the next few months in Pittsburgh's legal challenge of UPMC's tax-exempt status before delving more into a discussion about PILOT deals. The city sued UPMC in March to collect payroll and property taxes, estimated at $20 million a year.

UPMC didn't return a call for comment. The health care system's website said it has made PILOT contributions to city and county governments and school districts totaling more than $40 million since 1989.

In today's tough economic climate, it's becoming more common for school districts and other government entities to seek financial help from nonprofits within their borders, though legally the payments can't be required, said Jennifer Ross, chief information officer for the Pennsylvania Association of Nonprofit Organizations in Dauphin County.

In May, the Moon Area school board agreed to accept contributions from nonprofit Robert Morris University, which bought a Holiday Inn to convert to a dormitory. Annual contributions are $150,000 for the first three years, $100,000 for the next four and $50,000 in each of the final three years of the deal.

Ross noted that one purpose of nonprofits to is reduce the burden on governments by serving people in need. So if nonprofits use more resources for payments to the governments or school districts, they could give less aid, she said.

That's a concern for North Allegheny school board member Thomas Schwartzmier, a UPMC employee who said he would recuse himself from any vote on PILOTs.

“It's very difficult times to balance it all out and make it work,” he said.

Two nonprofits have PILOT agreements with Marshall, said township Manager Neil McFadden. He said Marshall would seek the agreements with any entity planning to build in the township.

The Regional Learning Alliance paid $6,058 to Marshall this year for police and fire services, through an agreement that began in 2003, he said.

The Society of Automotive Engineers International, whose PILOT started about 30 years ago, paid $9,341 this year to the township's recreation fund, McFadden said.

Tory N. Parrish is a staff writer for Trib Total Media. She can be reached at 412-380-5662 or tparrish@tribweb.com.

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