ROYERSFORD — The Spring-Ford Area School District preliminary budget for 2013-14 shows a shortfall of $2.5 million, according to a presentation at Tuesday night’s school board meeting.
The $132 million budget will likely require a tax increase to cover the difference but that increase will fall under the 3.1 percent increase allowable under the state’s Act 1 index, including exceptions the district is qualified to take.
Despite the challenges faced by shortfall and rising costs that are beyond the district’s control, Spring-Ford Area School District Business Manager Timothy Anspach remains optimistic.
“To me, it’s one of the most comfortable preliminary budgets we’ve had in recent years,” he said.
Anspach did not downplay the difficulties of finalizing the budget.
In the presentation to the board Tuesday night, Anspach said the biggest challenge facing the district is rising employee salaries and benefits.
The preliminary budget for 2013-14 shows a projected increase in spending of $5.6 million.
Salaries are projected to rise from $57.5 million to $59.3 million in 2013-14, a 3.2 percent rise, and benefits are scheduled to go up from $27 million to $28.8 million, a 6.5 percent rise. Respectively, those two items account for 45 percent and 21.85 percent of the total increase in costs projected for next school year.
Additionally, contracted services in the district will rise from $12.8 million to $13.5 million, a 5.1 percent increase, which accounts for 10.2 percent of the 2013-14 projected rise in costs.
One bright spot in the presentation was the expected rise in state funding by roughly $2.28 million.
On the whole, revenue is projected to increase for the next budget, according to the district’s numbers, by $3.1 million. That rise would only cover roughly 86 percent of the cost increases in salaries and benefits, however.
As such, a tax increase is likely, but the district did not release any definite tax figure beyond saying that it was below the 3.1 percent allowable threshold.
Anspach said the number is “nebulous” and will likely be changing several times between now and when the budget is closer to finalization in May when it’s presented again or June when it’s finalized.
“What you see tonight could be completely changed by June,” Anspach said.
For the 2012-13 school year, property taxes were increased 1.97 percent.
The Pennsylvania Act 1 index will remain at 1.7 percent this year but Spring-Ford will not qualify for one of the exceptions it was eligible for this school year.
Instead of qualifying for both the special education and retirement contribution exceptions, Spring-Ford can only utilize the retirement contribution exception which allows an additional 1.4 percent tax increase allowance.
“Our overall expenses haven’t grown higher than that 1.1 percent,” which would make the district eligible for special education exception, said school board President Tom DiBello. “I don’t want to give the impression that we’re cutting programs. We’re still providing the same quality, the same level from a special education standpoint. What we’ve done, over the last two or three years, is we’ve been managing the overall program very well to keep us within this window.”
DiBello said the desire to stay within the exception “window” was driven by the board’s anticipation of rising costs associated with the Public School Employees’ Retirement System (PSERS).
“PSERS is one of those things that’s a problem area,” Anspach said.
Because the system was changed when the markets were doing well, it became underfunded when the economy took a turn for the worse, Asnpach said. As such, that has been a “compounding effect” as increases in the need for the district to pay the fund are causing problems with budgets each year.
Due to increases in PSERS for the 2013-14 school year, a minimum raise in taxes of 1.63 percent would be required to balance the PSERS funding alone.
Anspach said the problem does not lie with the district’s staff but with the changes that created the problems.
“The employees pay for this. They pay 7.5 percent of their salary. They’ve been paying their fair share,” Anspach said. “The responsibility is with the state legislators ... they should have kept the rate at a higher rate and they did not.”
Board Vice President Joe Ciresi voiced his “disgust” with the situation and the perceived lack of progress in Harrisburg on coming up with any changes.
“Every time I look at this I’m disgusted to see the increases at what we have to pay to bring back the funds that they mismanaged,” Ciresi said. “Most of us sitting at this table, we’re not benefitting one iota from PSERS and we have zero say in what happens.”
“I don’t blame this on our teachers and no one in Spring-Ford,” he continued. “I blame our legislators.”
DiBello said the board gets “into grief” when they raise taxes to fix problems imposed on them by the state.
The board is scheduled to approve the preliminary budget Feb. 19 and will be presented with a final budget on May 20.