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Higher school taxes prevail in Western Pennsylvania, Trib finds

| Wednesday, July 1, 2015, 11:27 p.m.

About half of the school districts in Western Pennsylvania have raised property taxes to balance their budgets, an issue central to the state budget dispute between Republican legislative leaders and Gov. Tom Wolf.

A Tribune-Review sampling of 58 school districts in Allegheny, Beaver, Butler, Washington and Westmoreland counties found that 32 raised property taxes when setting recent budgets. Statewide, more than 70 percent of school districts warned they planned to raise tax rates in a survey released in June by the Pennsylvania Association of School Business Officials and the Pennsylvania Association of School Administrators.

“They have to do this to survive,” said Penn State University professor William Hartman, executive director of the university's Center for Total Quality Schools.

Wolf, a Democrat, met for a half-hour with legislative leaders Wednesday after his veto of a $30.1 billion GOP budget. Wolf wants to shift away from school property tax to higher income and sales taxes, and to impose a tax on natural gas extraction to put $400 million toward basic education.

With escalating costs and questions over how much state revenue will come from Harrisburg, many districts resorted to tax increases for their 2015-16 budgets. Officials cited escalating costs associated with teacher pensions, health care, special education and charter schools.

Pension contributions — another issue dividing lawmakers and the governor — are the biggest budget busters for many districts.

Wolf was reviewing a Republican-passed bill to replace guaranteed pension benefits for new state and school employees with 401(k)-type plans and curb benefits for current employees when they retire. Wolf proposed issuing a $3 billion pension obligation bond to pay down unfunded liability in the public pension system.

Higher retirement costs

Statewide, districts' state-mandated pension obligations to the Public School Employees Retirement System, or PSERS, will have soared nearly 60 percent between 2013-14 and the coming school year — from $1.8 billion to $2.9 billion.

Quaker Valley School District will pay $4.95 million, about $929,000 more than it paid in the 2014-15 school year, said John Sheline, director of finance and operations.

The district increased its tax rate by 0.1684 mills, to 17.3232 mills, to balance a $45 million budget, he said.

Quaker Valley, with 1,941 students from 11 towns, receives little help from the state because of its low poverty rate, Sheline said.

“The state looks at us as a wealthier district. ... It's unfair to us, to some degree, but it's the way it's been forever,” he said.

Like the Legislature, school districts in Pennsylvania are required by law to pass budgets by June 30 annually.

“In recent years, it's been relatively easy because they've received relatively little additional state dollars. But this year made it particularly hard because the governor proposed to increase dollars flowing to school districts by about $800 million directly and also put some cost savings in there for them,” said Jim Buckheit, executive director of the school administrators association.

The GOP budget includes an additional $100 million for basic education.

Some districts raised taxes after years of deferring increases and dipping into savings accounts during a down economy as the state's contribution to education funding decreased from 39 percent in 2008-09 to 37 percent last year, said Jay Himes, executive director of the School Business Officials Association.

Poorer districts receive more state money than wealthier districts, Hartman said.

State law limits how much districts can raise taxes without an approved exception from the Pennsylvania Department of Education.

Dipping into savings

After cutting six mid-level managers, losing 5.5 teaching positions through attrition and making other changes to save $1.4 million, Montour School District raised taxes for the first time in eight years — from 16.9 mills to 17.2 mills — to help close a $3.6 million deficit.

The school board angered some parents with a June vote to end a tuition-free pre-kindergarten program that wasn't a year old to help balance its $61.8 million budget.

Lisa Smarra, 47, of Kennedy, whose son is a sixth-grader in the district, doesn't take issue with Montour's tax hike.

“I'm hoping that the new board will continue to be fiscally responsible, but not at the expense of educational programs or students,” Smarra said. She hopes the changes won't adversely affect her son's gifted education program.

Woodland Hills School District, with 3,828 students from 12 municipalities, has such a high number of low-income families that every student qualifies for a free or reduced-price lunch — the measure school districts use to gauge poverty rates.

The biggest drain on the district is charter schools, for which Woodland Hills pays more than $15 million annually in tuition, Superintendent Alan Johnson said.

The school board didn't boost its 22.4 millage rate this year, despite Johnson's suggestion to do so, he said. Instead, it used $3.1 million remaining in savings to close a deficit in its $85 million budget. The budget factors in an anticipated increase in delinquent tax collections to raise about $2 million.

Without enough state help, Woodland Hills will be in fiscal trouble next year, Johnson said.

“We will be a district in danger of not having enough money to finish the year or create a balanced budget for '16-'17,” Johnson said.

A program expansion

Not all budgeting comes with cutbacks.

North Allegheny's school board approved a tax hike — from 17.4 mills to 18 mills — to help close a $7.2 million deficit in the 2015-16 budget, mostly caused by its PSERS contribution, officials said.

North Allegheny's spending plan includes a major program expansion, a technology initiative that will give every first- through 12th-grade student a laptop or iPad in four years' time, starting with an estimated $2.5 million for sixth-, ninth- and 10th-graders in the first year.

If North Allegheny needed to raise taxes to keep educational programs in place, so be it, said Beth Ludwig of McCandless.

“I know how important it is for us to keep strong as a district and, right now, with us being recognized nationally, that's huge,” said Ludwig, 53, a former school board member. “And I really don't want to see them make cuts willy-nilly over things that will hurt us.”

Tory N. Parrish and Katherine Schaeffer are staff writers for Trib Total Media.

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