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Penn Hills

Penn Hills School District adopts unbalanced budget, raises taxes, cuts staff

Michael DiVittorio
| Friday, June 29, 2018, 4:51 p.m.
The Penn Hills School District administration building.
Michael DiVittorio | Tribune-Review
The Penn Hills School District administration building.

Penn Hills School District board of directors has approved an unbalanced 2018-19 budget with a tax hike, 12 teacher furloughs and a promise of state financial aid.

Members voted 8-1 to pass the budget at a special meeting June 30. Board President Erin Vecchio dissented.

In a related motion, the board voted 7-2 to set the property tax rate at 28.6646 mills, a 1.1076-mill increase.

Vecchio and board member Evelyn Herbert opposed the tax increase.

Vecchio said residents cannot afford to keep paying high taxes, and that she will not vote to approve any district fiscal matters until Allegheny County District Attorney Stephen A. Zappala Jr. is done with his investigation into district finances.

Board Member Kristopher Wiegand said no one likes to raise taxes, but it's necessary to help dig the district out of its financial hole.

“We have to do what we have to do to keep this ship afloat,” he said.

School Director Mike Tauro noted the board is in the same boat as its residents.

“These decisions affect all of us as part of the community,” said Tauro.

A property owner with a $75,000 home will pay about $83 more in taxes, and a home valued at $100,000 will result in $110 more in taxes with the new rate.

The district raised taxes by 1.2509 mills for the 2017-18 school year after receiving approval from the state Department of Education to raise the millage above the Act 1 index, citing additional expenses for special education and retirement costs. The index is a state formula that limits tax increases.

Each mill generates approximately $1.383 million for the district.

The county investigation started shortly after the May 2016 release of state Auditor General Eugene DePasquale's performance audit of the district, in which he cited fiscal mismanagement, bad business decisions and a lack of oversight.

Penn Hills is approximately $172 million in debt, largely due to the construction of the elementary and high school.

The district has made managerial adjustments to the business office since the investigation began, including making former human resources director Eileen Navish its business manager and appointing her interim treasurer at the recent special meeting.

Former treasurer Rob Marra resigned from that position earlier this month when he was appointed to the board to fill the unexpired term of Marlon Ferguson, who resigned June 18. Marra, who was out of town, participated in the June 30 meeting by phone.

The final 2018-19 budget lists estimated revenues at approximately $91.16 million and expenses at $93.16 million.

State law mandates the final budgets be balanced.

District officials project the $2 million gap to be filled by the sale of the vacant Forbes Elementary building.

However, Navish said there is no buyer yet, and the district is choosing not to balance its budget on paper by listing the anticipated $2.5 million revenue at this time.

Superintendent Nancy Hines said the state Department of Education has been notified about the budget and is aware of the district's financial situation.

Michael Lamb, a technical adviser appointed by the state, was to work with the district through June 30 to improve its fiscal standing.

It was unclear if his time would be extended.

The teacher furloughs include three at the elementary level. Other program curtailments proposed for next year include cutting high school physical education from a semester to a nine-week model, not replacing a retiring hearing-impaired-services teacher and eliminating French 1.

Even with the tax increase and staffing cuts, the district was facing an estimated $4.4 million budget shortfall in May.

Navish said that was cut by $2 million thanks to additional state funding that state Sen. Jay Costa, D-Forest Hills, assured the district will come through.

Board members thanked Navish, Hines and Costa for their efforts.

“We've come a long way,” Vecchio said. “We are a financially distressed school. We cannot have a (state) takeover. We need to do whatever we can. This group right here, we're not quitters. Everybody is working together to make this district better.”

Penn Hills received a $2 million grant from the state in December. It was unclear if the newly anticipated state funds would come from the same program.

The board also approved a $9.9 million tax anticipation loan from PNC Bank. Municipalities and school districts acquire such loans to take care of expenses until real estate tax dollars are collected.

The late June special meeting became necessary after the school board failed to adopt a preliminary budget at its May 21 meeting.

Michael DiVittorio is a Tribune-Review staff writer. Reach him at 412-871-2367, mdivittorio@tribweb.com or via Twitter @MikeJdiVittorio.

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