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GOP lawmakers say schools should use reserves

| Monday, May 21, 2012, 12:36 p.m.

HARRISBURG -- Two Republican lawmakers want to force school districts to dip into so-called "rainy day" reserve funds to balance their budgets before they raise taxes.

State Reps. Mike Vereb of Montgomery County and Mario Scavello of Monroe County said Monday that they are developing legislation that would either limit the amount of money districts can hold in reserve, or ban them from raising taxes if the money needed to balance the budget is available.

"Harrisburg takes a kick in the teeth for not sending enough revenue to these schools," Vereb said. "Blaming us is ludicrous."

Vereb estimates that, in all, school districts across Pennsylvania had $3.2 billion in reserve during the 2010-11 school year, and that $2 billion could be added to that amount by the end of the 2012-13 year.

But some school officials think the state has no business dictating what local districts should do with their money.

"If people are unhappy with a school board for raising taxes when they have the money sitting in reserve, they can vote those board members out," said Carl Barbarino, president of the Penn Hills School Board.

Scavello said a reserve fund equal to between 5 percent and 7 percent of the budget is adequate for emergencies. Some districts, however, have an amount equal to 25 percent to 30 percent of their budget set aside, he said.

Under a 2006 law, school districts can only raise taxes by an amount prescribed by the state. To exceed that threshold, districts must either put the request to the voters in a referendum or seek a waiver from the state.

This year, 199 of the state's 500 school districts sought waivers, according to Tim Eller, spokesman for the state Department of Education.

Herb Yingling, president of the Franklin Regional School Board, said "healthy reserves" are necessary to deal with the uncertainty in state funding from year to year.

"It would be fantastic for districts to be able to implement long-term financial planning," he said. "But we never seem to know what the state will hit us with next."

Like Barbarino, Yingling thinks local school boards should have the autonomy to handle their own finances.

"I don't know of any district that has 25 or 30 percent in reserve, but if they have that kind of money, they should be able to run their own show," he said.

Barbarino said Penn Hills learned that draining cash reserves can be risky.

"By not raising taxes, we got to the point several years ago that we spent our reserves down to about $125,000 and were in a very poor position to deal with any emergencies," he said.

"We've worked hard through cuts, belt-tightening and refinancing high-interest bonds to build those reserves back up. I don't think we want to go back to where we were."

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