ASD budget has $5.1M hole despite tax hike
Armstrong School District will operate on a $93,124,002 budget in 2013-14 with a property tax rate of 56.63 mills for Armstrong residents and 160.82 mills for residents of Indiana County.
The 2.36 mill increase from 54.27 mills in Armstrong means $5.66 of each $100 of assessed property valuations will go the district. In Indiana, the 10.68 mill increase from 150.14 mills means $16.08 of each $100 assessed will go to ASD.
The budget was unanimously approved during a special meeting Thursday, with directors Royce Smeltzer, Amy Lhote and Larry Robb absent.
Business Manager John Zenone said the district expects $98,272,821 in expenses, giving ASD a deficit of about $5.1 million. The district's starting fund balance on July 1 will be $7,032,155 with a projected ending balance of $1,883,336 in June 2014.
Zenone said the approved millage increase will bring the district a much-needed additional $594,000.
From 2004-05 to 2010-11, the millage rate in Armstrong remained steady at 55 mills until that board voted to drop the rate to 53 mills. Zenone said that decision, which was made before he was employed by ASD, was a costly mistake.
“The first year we reduced millage, it was roughly $1.1 million (that ASD lost), and that has a compounding effect,” he said.
“The second year it was $2.2 million, and the third year, it was $3.3 million.
“That means (if the rate hadn't been lowered) we would have $3.3 million more in the fund balance to smooth out future millage increases. We might have to. Now, we don't have that option.”
Zenone said there were few changes to the final budget since the board discussed it in May, but the most substantial is the more than $2 million ASD stands to save because the proposed Everlasting Elderton Charter School application was denied.
“Since that hasn't come to fruition, we're taking that out of the expenses, thankfully,” he said, noting that ASD will have to tuck that money away in a recently created capital reserve fund in case the issue resurfaces.
“We're placing $2 million in the capital reserves due to the fact that charter schools can reapply. Until that (issue) is completely diffused, we should keep the expenditure stream still there.”
Zenone said Everlasting Elderton could prove to be a thorn in the district's side for the foreseeable future.
“We could have this battle year in and year out,” he said.
However, he said the biggest challenge ASD faces in the coming years will be keeping up with employee salaries and benefits as PSERS rates continue to grow.
“Next year's salaries (total) is projected to be $42,072,000, and our contribution is going to be $7,120,000,” Zenone said. “If we go into the future by four years and keep the same salaries, we'll be paying $12,264,000. The rate goes from 16.93 percent to 29.15 percent, and that's an increase of $5 million, which we split with the state.”
Another consistent obstacle for districts is dwindling state funds. Zenone said Gov. Tom Corbett recently proposed dipping into the state's fund balance of $544 billion to provide money to schools in Pennsylvania.
“If they're using their fund balance, I don't know how we could expect huge increases (in allocations) from the state,” Zenone said. “In 2012-2013, they have given districts as a whole $10.97 billion. Next year, they're proposing $11.30 billion. That's an increase of $448 million but $224 million of that — about two-thirds — is allocated towards PSERS obligations.”
For now, board President Joe Close said ASD is making the most of what it has to work with.
“Nobody likes a tax increase, and it's the toughest part of this job,” he said. “But I think this increase is reasonable. If you look at other districts, there aren't too many that aren't increasing taxes right now. We're kind of playing catchup after the millage decrease a few years back, but the teachers contract (passed this month) and several cuts and reductions the administration made elsewhere will help to get us back on track in the next few years.”
Tim Karan is a staff writer for Trib Total Media.