Baldwin-Whitehall school board approves tax decrease
The majority of Baldwin-Whitehall School Board members opted to decrease the property-tax rate by 2 mills for next school year and said they don't want to hold residents' money in reserve accounts.
Other board members, however, called the move “fiscally irresponsible” and said the millage decrease will hurt the district in the future and that the money in the fund balance is needed for future costs.
Board members, in a 5-4 decision on June 11, approved the 2-mill real-estate-tax decrease for 2014-15, which reduces the millage from 19.61 to 17.61. One mill in Baldwin-Whitehall brings in about $1.8 million.
The owner of a home assessed at $100,000, will pay $200 less a year with the lower millage.
Board members in a separate 5-4 vote approved a $62.7 million budget for 2014-15.
To make up for the $3.6 million reduction in revenue from the millage cut, board member Martin Michael Schmotzer said, the money will be taken from the district's fund balance. In all, the 2014-15 budget now includes an estimated $3.8 million deficit from operations, business manager Mark Cherpak said.
Yet, with a fund balance of $16.8 million, as of June 30, 2013, and an estimated surplus of more than $1 million from the 2013-14 school year projected to be added to that number, Schmotzer said, it was time for a cut in taxes.
“We're not a Wells Fargo. We're not a bank,” Schmotzer said. “We're a very, very healthy, very strong school district.”
Administrators recommended board members approve a budget that kept the tax rate the same. That budget was presented to the board and received preliminary approval last month.
Board members Tracy Macek, David Solenday, Karen Brown and President Larry Pantuso dissented on the millage decrease and budget.
Macek said her colleagues' vote was “so fiscally irresponsible it's nauseating.”
Brown said she worries the board majority's actions only will trigger an increase in the tax rate later.
Schmotzer, however, said the lower millage will bring more people into the district, where enrollment has been steady at about 4,145 students.
In 2013-14, revenues were budgeted at $60.6 million, while expenses were set at $60.4 million. For 2014-15, revenues are planned at $58.6 million, a reduction attributed to the millage decrease, Cherpak said. Expenditures for next school year are budgeted at $62.7 million, with an increase attributed to salaries, retirement and health insurance costs, he said.
Cherpak presented a five-year projection that showed using the fund balance to balance the budget each year, even if the millage were raised. For 2014-15, the budget called for using about $300,000 from the fund balance before the millage decrease was approved.
Baldwin-Whitehall's fund balance includes $3.9 million in committed funds, $8.1 million in assigned and $4.8 million in unassigned dollars, as of June 30, 2013.
Pennsylvania School Code does not limit how much money a district keeps in its committed or assigned fund balances, said Steve Robinson, spokesman for the Pennsylvania School Boards Association.
Section 688 of the Pennsylvania School Code does say district officials cannot approve an increase in real-estate taxes with an unreserved, undesignated fund balance of more than 8 percent of the budget if the budget is at least $19 million.
A school district's fund balance can be thought of like a personal savings account that can be used for “unforeseen expenses and emergencies,” Robinson said.
District officials need to look at their long-term plans when determining how to use their fund balance, said Jeff Ammerman, director of technology with Pennsylvania Association of School Business Officials.
If a district is looking to “drawn down a fund balance, you have to do it in a way that's going to close the gap” between revenues and expenditures in the future, so that the district doesn't run out of money too quickly, Ammerman said. “You want to make sure you don't get yourself in a spiral.”
Baldwin-Whitehall had $68.3 million in outstanding debt, plus interest, as of June 30, 2013, Cherpak said. The annual payment is approximately $7.5 million through 2028.
Stephanie Hacke is a staff writer for Trib Total Media. She can be reached at 412-388-5818 or firstname.lastname@example.org.