Budget Presentation 2/10/2011

  The entire package can be found at Budget Presentation Package

I tried several ways of adding the slides, but the print was too small no matter what I did to them.

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The two biggest things are the loss of stimulus funds and PSERS rates.  A new challenge is the health care legislation.



[Page 3]

The first 3 bullet points are important.

If the assessed values decrease , then the same millage will not bring in the same revenue.

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For the 2009-10 school year, the budget called to use $ 712,479 of fund balance.  The actual broke even. 

Basic education funding came in below budget, but was made up in Federal funding.  Local revenue is declining.

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89% of local funding comes from Real Estate taxes.

Earned Income Tax (EIT) was $1.9M (million) two years ago.  We lost $400,000 over two years due to wage cuts & unemployment.

Investments brought in $570,000 in revenue two years ago.  We lost another $400,000 here over two years.

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Variances - Since the District did not know where the funds were coming from, they budgeted in Dues/Fees.  As the funds came in, they were booked in the appropriate categories.

This was the first year the District budgeted for staff moving through the scale.  They never budgeted it before as staff would come and go.  As teachers left, others would be hired at a lower step and it evened out.  They expected there would be less people leaving, so they budgeted for the increase in salaries for credits earned.

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Approx. $ 190,000

December 2010 over $ 200,000

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Estimated 16% increase in healthcare costs.

In 2006, the District had a negative fund balance.

They started restricting funds for fringe benefits & other spikes in costs.

The State changed the PSERS rate after the preliminary budget was run.  This will save $500,000 this year. 

The District needs 2 months worth of expenses in fund balance to get through the summer.

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The State reduced funding by $50,000.

Demand Response- The District signed an agreement with PECO.  During peak times in the summer, the District will curtail electric use 100% when asked.  They were asked once during this past summer on July 6th.  The District received $47,000 for 4 hours.  There is the potential for the school to have to shut down during the school year as the program runs from June 1 - Sept. 30.  It is a two-year program.

Retirement expense is down because of the change of rate.

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A quick & dirty calculation shows a need of $952,000.

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It is possible that Basic Ed funding could go back to 2007-08 levels.*  That has been taken into account.

The shortfall of revenue is $548,108.  The District probably will not find out final numbers until later than normal.  The new Governor has an extra month to submit the PA Budget.

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Act 319

16% of the parcels in Lancaster County fall under this.  The assessed value is $105M.  The tax value is $47M.  That is an exemption of $58M assessed value.  There is a property tax shif of $1.6M.  That equals $1,300 for each homeowner in Lancaster County.

In Chester County, there 5400 parcels.  There are 812 in Act 310 (14.8%).  The assessed value is $123M.  The tax value is $13M.  That is $109M in exceptions.  $3.8M is shifted to the other parcels.  $825/parcel shifted.

There is a total of $5.4M spread to the residents not in Act 319.

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HB 2497 passed in December.

2014-15  $2,000,000

The State will also be increasing $2M.

The Annual Change in the Chester County Tax Base

prepared by the CCIU

The County has lost tax base since 2002.

Kennett has lost $20M in tax base.  They had 29% increase in healthcare costs.

5-Year Financial Projections

The model is based on the current budget.  We are starting off with no reduction in spending.  The numbers will improve as we make changes.  We needed to see where we would end up with no changes.

Budget Reduction Memo

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Questions/Comments/Discussion

(I didn't get this person's name):  Why the difference between Chester & Lancaster Counties?

It is a state formula based on assessed values.  The assessed values get rebalanced by the formula.

Larry Lavenberg (Atglen) had some suggestions: 

1. He feels the Budget Reduction Memo nibbles at athletics.  He thinks they should be eliminated.  The School Code doesn't say that districts have to support athletics.

2. There should be a 4-day school week.  Students would go longer days.  There would be savings in transportation, maintenance & other expenses.

3. Transportation - The School Code says that if you bus 1 person, you have to bus everyone.  It costs $2.7M per year.  Buses should be eliminated.  School hours could be changed to keep everyone from showing up at the same time.  The other option would be for parents to pay for transportation ($1000/child).

Another gentleman asked about the student/teacher ratio.  He asked about the possibility of raising it to cut staff.  Dr. Newcome referred him to the budget reduction memo.

Judy Stuehrmann asked how many districts are impacted by Act 319 in the way that Octorara is.  Dr. Newcome said that Solanco, Oxford & Pequea are in this bi-county area.

Mrs. Stuerhmann asked why the state does not give districts something back for that.  Dr. Newcome stated that Mr. Hume has been very vigilant on this topic.  He's been in contact with Harrisburg over the past 5 years.  Dr. Newcome had testified.  Representative Hershey has introduced legislation.  Representatives Houghton and Cutler continued.  A bill is not out of committee yet.  This is legislation that does not interest representatives in areas not impacted by this. 

Dr. Newcome further explained that a couple of years ago, an economic summit was held at the High School with munipal authorities & the public.  Out of that summit, the Octorara Region Planning Commission was started.  The goal is to bring rateables to the district.  (A rateable is a commercial property for real estate tax purposes).  The idea is to target areas that are zoned for business without hurting the agricultural nature of the district.

School financing will not change in the near future.  Residents need to talk with their elected municipal officials to work on commercial development.

Anita Grimes asked about the increase in the projection for charter schools.  She asked for a breakdown of charter school students between elementary & secondary.

Dr. Newcome said they would get the breakdown.

Mr. Carsley  - the tuition rate is based on the district's budget.  For this year the rate is approx. $12,000 per student.  Special needs students are approx. $28,000.  Enrollment  is increasing.  They have seen a lot of families who had students in private school switch to charter schools when a parent became unemployed. 

One mill is worth different amounts in in different districts.  In West Chester, one mill is worth $ 8 million.  At Octorara, it is worth $900 thousand.

A question was asked about the possibility of merging districts.  Dr. Newcome said he has not been given the direction to pursue that.  He doesn't believe it would improve Octorara's situation as the most likely merger candidates would be Solanco, Pequea and Oxford (the same three that have the same issues as we do with Act 319).  While there would only be one superintendent, there would be an increase in the number of assistant superintendents.  There would also be additional positions added such as a student assignment director (the person who would determine boundaries & which schools students would go to).

He said that a county system wouldn't really save any money, but would change the amount of money that would be allocated to our area.

Dr. Newcome offered the opportunity for residents to meet with the district administrators to go over the budget and ask questions. 

The discussion moved to athletics.  Dr. Newcome feels that the PIAA will not exist in 10 years. 


There will probably be significant changes to the budget given the information in this article (it will also be posted in a separate post on this blog) : http://articles.lancasteronline.com/local/4/352788