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Budget Shortfall of Millions Possible for State College Schools

on October 26, 2010 8:28 AM

A rocky environment for revenue and rising expenses next year could create a budget shortfall "in the millions of dollars" for the State College Area School District, business administrator Jeffrey Ammerman said Monday night.

Already, for the current school year, the school board cut more than $3 million in expenses and limited a property-tax increase to the range of three percent. For the 2011-2012 school year, the roughly $110 million annual expense tab is likely to see additional cuts. Jim Pawelczyk, the board vice president, said that he estimated a worst-case-scenario budget shortfall of about $5 million for '11-'12.

Ammerman did not affirm the accuracy of that estimate at a Monday board meeting, instead putting a worst-case shortfall more generally "in the millions." He said the district is seeing a variety of significant financial uncertainties as it approaches the next school year. Those range from federal and state support to the condition of the local property-tax base.

Next week, meanwhile, the district next week will reconvene a cost-control task force to explore potential expense reductions and how they might affect the school system.

Pawelczyk said he will put a premium on minimizing any damage done in the cost-control process.

"We know there's going to be pain," he said, "but I don't think anybody signed up for this (position on the board) to cause damage."

Budget cuts that took effect for the current school year have affected staffing levels, which lost about 18 positions to attrition; some transportation operations; and energy usage, among other elements. Board member Jim Leous said that he is "hoping we didn't get all the low-hanging fruit last year, but I fear we might have."

The board president, Ann McGlaughlin, emphasized that "this is talk that is going on all over the state of Pennsylvania. ... It's out there across the board" as schools face financial challenges.

The state government has set a property-tax-increase cap of 1.4 percent for '11-'12 in the State College district. The district can use budgeting exemptions to pursue a higher cap if the board decides to move in that direction, Ammerman said. But even if exemptions were factored in, he said, the district is not likely to see a cap higher than five percent.

Each property-tax increase of 1.5 percent generates about $1 million in new revenue for the district, Ammerman said.

He said the district is expected to prepare a preliminary '11-'12 budget by late January, and the board must adopt one by Feb. 16. He said the administration expects to have a rough budget concept sketched out by December, though a variety of uncertainties --  including the future of more than $1 million in federal stimulus money -- are likely to linger even at that point.

In other business Monday night, Superintendent Richard Mextorf said the administration is continuing to set the groundwork for a State College Area High School overhaul project. He said administrators are meeting with key stakeholders, reviewing input and developing a thorough sense of how elements of an overhaul might emerge. Discussions are expected to continue for a number of months, though a specific timeline is not formalized, Mextorf said.

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