North Allegheny keeping property taxes at current rate

North Allegheny School Board adopted a resolution on Jan. 25 to keep property taxes for the 2023-24 school year at the current rate of 19.74 mills.

The school board’s action came hours after Auditor General Timothy L. DeFoor released audits of 12 school districts across the state, including NA, that scrutinized their taxing and spending practices.

Under the 2006 Taxpayer Relief Act, school districts must keep property tax increases within an “index” calculated by the state. To go beyond this cap, school districts must either ask voters for a referendum or apply to the state for exceptions. If the exceptions are approved, school boards can raise up to the index of 4.1 percent plus any approved exceptions.

The audits found that the school districts applied for a referendum exception as a regular budgeting tool, rather than using it for extreme measures, which is why the law was created. DeFoor said each of the 12 districts had enough unused money to fill budget gaps during the years they raised taxes.

When asked for comment prior to the NA school board meeting, NA board president Elizabeth Blackburn said, “The board has not received results of the audit so we have no comment.”

The office audited NA’s finances for the fiscal years ending June 30 in 2018, 2019, 2020 and 2021. NA requested a referendum exemption in each of those fiscal years, the audit found. The district raised taxes above the index in the fiscal years ending June 30, 2019, and June 30, 2020, citing pension obligations and special education needs.

NA entered the fiscal year that ended on June 30, 2019, with nearly $16.8 million in its general fund, according to the audit report. It had more than $14.2 million in its general fund when it entered the fiscal year ending June 30, 2020.

For the current 2022-2023 school year, NA raised its millage rate from 19.1408 to 19.74, but this fell outside of the auditor general’s review.

The preliminary budget for the 2023-2024 year keeps the millage rate at 19.74, said Kermit Houser, assistant director of finance and treasurer for North Allegheny.

The median value of an NA home is $250,000, according to Houser’s report.

The preliminary budget for 2023-2024 projects $194,365,378 million in expenses, approximately $3.4 million more than the current budget. But this is very early in the budgeting process, and numbers could change.

As it stands right now, there is an approximate $200,000 deficit between revenues and expenses, but Houser said he is pleased that the difference is small.

Blackburn said it’s clear the NA finance team “really looked at the budget closely and have given us a fair and good analysis” of the district finances.

About 75% of expenses go toward salaries and benefits, which is based on current staffing. Retirements, sabbaticals, leave of absences, and changes in student enrollment could affect this number, Houser said.

Among other costs, there is a $1.5 million cost for math textbooks, but they are still meeting with vendors, Houser said.

The district may be required to issue property tax refunds based on the outcome of a pending lawsuit in Allegheny County. This lawsuit will determine whether properties will be reassessed a different level.

School districts are required to budget annual contributions to the Pennsylvania Public School Employees Retirement Act, commonly known as PSERs. Houser said the district received some “good news” from the state Department of Education in December that the state-mandated PSERs contribution rate will fall from the current 35.29 percent of an employee’s salary to 34 percent, for a 2023-2024 contribution of $30.16 million from the school district.

School district employees also contribute to the retirement system. 2023-2024 would be the first year the PSER rate has decreased. But the reprieve is temporary because Houser said the rate is supposed to rise the following year to an estimated 34.73 percent. Houser said officials expect increases until 2034.

“It’s good news for next year but it’s with some caution,” Houser said.

Local school district revenue comes mostly from real estate tax millage, earned income tax and interest earnings. NA anticipates state revenue of more than $41 million. But the final amount is not available yet from the state, Houser said.

Federal funding is estimated at $2.5 million.

The proposed budget will be reviewed at a Budget and Finance Committee meeting scheduled for April 19 at Hillvue Lane in the Central Administration Officers. A proposed final budget is expected in May.