New Kensington-Arnold School Board continues to pave way for hefty property tax hike

New Kensington-Arnold School District will go forward with preparing a preliminary budget for the 2020-21 school year as it readies to ask the state for permission to increase property taxes by more than twice its limit.

The school board voted unanimously Thursday night against a measure that would have prevented the board from raising taxes by more than the state-imposed limit of 3.9% — or no more than 3.32 mills — for the 2020-21 school year.

Preparing a preliminary budget is the first step toward seeking a higher property tax increase. Business Manager Jeff McVey has prepared a $38.96 million budget with a 7-mill increase, based on the state allowing the district to increase the property tax rate by another 3.68 mills for special education costs.

The district must submit a preliminary budget to the state by Jan. 29. The board’s next regular meeting is on Jan. 28.

The preliminary budget will be available to the public to review for at least 20 days before the board votes to approve it, McVey said.

A 7-mill tax increase would increase the property tax rate from 85.27 mills to 92.27 mills. That would increase the tax bill on a home assessed at $20,000 by $140, from $1,705 to $1,845.

The district would collect about $781,000 from a 7-mill tax increase, according to McVey. That’s based on the district being able to collect about 89% of the property taxes it charges.

Without a tax increase, the district is facing a nearly $1.8 million deficit for 2020-21, according to McVey.

Even with a 7-mill tax increase, the district would face a roughly $988,000 deficit that its reserves will not be able to cover.

According to McVey, the district will end the current school year with about $639,000 in its reserve fund. At the end of the 2020-21 school year, the district will have depleted that fund and be in the red by about $348,000.

The district had about $7.6 million in its reserves 10 years ago. Those reserves have been depleted as the district has had deficits ranging from about $82,000 to $2.3 million in eight of the past 11 school years, according to information McVey presented to the school board.

McVey is projecting a $1.25 million deficit for the 2019-20 school year, despite the district getting almost $850,000 from selling the Fort Crawford building.

The district may be helped by an increase in federal funding that could lower the tax increase, school board member Bob Pallone said. How much the district will receive will not be known until April or May.

McVey is projecting that the district will continue to receive about $1.8 million in federal funding, which would account for less than 5% of the district’s $37.97 million in revenue.

Pallone noted that the district’s retirement contribution rate has declined slightly since McVey’s previous budget presentation, from 34.77% to 34.225%.