BASD--District faces $12.5M deficit in 2017-18
The preliminary budget for the 2017-18 school year reveals that the district’s expenditures exceed its anticipated revenue by $12.5 million. The district has already begun working to close the gap by June.
Business manager Stacey Gober told the story behind the numbers at the finance committee meeting Jan. 17, and it includes increases in employee pension contributions and charter school tuitions with incoming state subsidies remaining relatively flat-lined.
The cost break-down of the deficit includes $3.8 million for pensions, $2.7 million for salaries, $2.6 million for academic initiatives, $1.5 million for general operations, $1.2 million for student tuition and $704,056 for charter schools.
Expenditures for instruction will increase by 4.08 percent. Support and non-instructional services, which include things like library services, health services, transportation, athletics and student activities, as well as debt services for infrastructure, saw increases from 2.5 percent to 7.77 percent. The summary total for these expenses comes to $214,919,833, up just over $10 million from last year.
By and large, the greatest increase is the 12.73 percent jump in payments to the Pennsylvania State Employment Retirement System, which manages the pension program for state employees. The district will pay $33.7 million toward employee pensions in 2017-18, up by $3.8 million from last year.
These cost increases are the result of the district sharing the burden with the state to replenish the state pension fund. Superintendent Dr. Joseph Roy explained that when markets were steadily growing years ago, the state declared that employees did not have to contribute as much toward retirement, a decision that backfired years later when the market dipped. BASD employees currently contribute 7.5 percent of their salaries toward pensions with the state and district share the remaining costs of replenishing the fund. The district will pay 32 percent of this cost-share this year, up from 30 percent last year.
As salaries and benefits consume 60 percent of the entire budget, a graphic provided by Gober showed increases in employee salaries and benefits versus those of charter school tuitions and pension payments over the last six years. She explained that, in that time, salaries and benefits have increased 2 percent and 4 percent respectfully while pension payments have risen by 49 percent.
“If we didn’t have that animal to chase, we’d be sitting relatively flat with very moderate increases in salaries and benefits,” Gober explained.
Roy added, “This speaks to our ability to control costs.”
Gober further explained that 14 percent of the total budget, over $38 million, goes toward tuition for outside student programs, including charter schools, vocational technical schools and community college programs. Of this $38 million, $26 million alone is for charter schools, Gober said.
“That’s 14 percent of our budget that’s going out the door,” Gober stated.
Charter school tuition payments went from $4.8 million in 2009-2010 to about $10 million last year. Gober noted that the $26 million projected for this year consumes 17 percent of the district’s tax base.
According to another graphic representation provided by Gober, costs paid out to charter schools and pensions have risen from $10 million to over $60 million – a 510 percent increase – over the past 12 years.
“A lot of that money could have been used to implement student programs and reduce the community tax burden,” Roy noted.
Initially, the debt came in at roughly $15 million, Roy said, and has been reduced to $12.5 million after making some difficult programming decisions that will play out in the classroom. According to assistant superintendent Dr. Jack Silva, likely to take a hit are curriculum revisions in subject areas such as social studies, art and technology, after school and summer programming, classroom technology purchases, professional development and Excellence Through Equity Initiatives.
“That’s $2 million dollars that would have been available for these programs,” Roy said.
Programs remaining top priority include Reading by Third Grade (RBG3), revisions in the math curriculum and PROJECT LEAD THE WAY, for which funds are being used to complete an engineering series at the high school level and an upcoming series in biomedicine, Silva said.
Also not to be touched are collective impact efforts that include Community Schools and local partnerships, beginning elementary school Spanish language learning, the high school computer science program that enables students to earn computer science credits before graduation, and personalized instruction initiatives.
“We have to keep our foot on the gas on these initiatives or we won’t see the long-range benefits and returns of these investments,” Silva explained.
Silva alluded to the additions and enhancements to educational programming the district could have made with the $26 million paid in charter school tuitions.
“If the purpose of a charter is to offer something that you can’t offer at a normal school, we would have offered it if we’d had the funds to do so,” Silva stated.
The district intends to ask permission from the state to increase local taxation over the 3.1 percent limit established in Act 1 of 2006. According to this Act, districts may apply for exceptions for certain expenditures. Roy says that this measure is to help ensure that the district is not “handcuffed” and it does not mean that the community would see a significant tax increase. The district will continue to chisel at the deficit from now until June.
A special board meeting will be held Feb. 13 to adopt the preliminary budget. Subsequent budget workshops will take place March 29 and April 26 with the tentative final budget adoption slated for May 15 and the final budget adoption for June 19.