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Turnout Light at State College Budget Hearing; Board Questioned over Tax Plan

on June 07, 2011 8:57 AM

Three residents addressed the State College Area school board Monday evening in what turned out to be a 27-minute budget hearing.

The public hearing, a state-mandated part of the school district's annual budget process, began with a 15-minute fiscal overview from Business Administrator Jeff Ammerman.

When the board opened the floor to the public, resident Don Gordon soon challenged the district's use of "exceptions" in balancing its budget.

The standard, inflation-based tax increase that the state allows in State College for 2011-2012 is 1.4 percent. But if the district makes use of state-allowed exceptions -- that is, reasons to move the increase beyond the inflationary standard -- it could bump the tax increase to as much as 4 percent. The exceptions allow the board to push the tax rate higher in order to help pay for specific line items.

For now, a majority of board members has endorsed using two exceptions -- one each for special-education and retirement expenses -- to push the tax increase, tentatively, to 2.65 percent.

But Gordon said the district's actual projected expense growth in special education and retirement obligations is hundreds of thousands dollars less than the added revenue -- some $1.9 million -- that the exceptions would yield.

"I think we may have an ethical dilemma," Gordon said.

" ... You have to have a certain integrity to keep the school district (operating without) the same problems we've gotten into year after year after year," he soon added, referring to a controversial high-school expansion plan, tax-increment financing approved for Fraser Centre, and a swap arrangement with a Canadian bank that's now under litigation.

While the exceptions as proposed are legal, Gordon said, "that doesn't make it right. ... I really think you need to rethink this."

Interviewed after the meeting, board member Jim Leous said he agrees that the retirement-expense portion of the budget should be rewritten to reflect better the obligations in that category.

But he took exception to the implication that the district is acting unethically. Leous said the issues at play involve how the budget is interpreted. For instance, while the current year's budget was written to reflect a a nearly three-percentage-point increase in the district's retirement obligation, adjustments on the state level have delayed the implementation of that increase to 2011-2012, he said.

Thus, Leous said, the actual retirement-expense increase expected in 2011-2012 could be seen one of a couple ways, depending on how the current year's expenses are read.

Either way, he said, the 2011-2012 local line items for special education and retirement obligations -- projected at $14.26 million and $2.61 million, respectively -- still far outpace the revenue that would be generated for those categories through use of exceptions. He still supports the 2.65 percent overall tax increase included in the budget proposal, Leous said.

Three of the nine board members, however, have already voted against the tentative spending plan, suggesting that the budget needs to be tightened further. They are board President Ann McGlaughlin, Vice President Jim Pawelczyk and member Richard Bartnik.

At the Monday budget hearing, district resident Anthony Biviano applauded McGlaughlin, Pawelczyk and Bartnik for their position.

"Much of the board caved. It's like you (those who support a 2.65 percent increase) have no heart to make the tough decisions," Biviano said. "Going forward, you're creating a continuing problem. ... You need to get to a Marine drill-sergeant financial counselor."

Financial data supplied by the district suggest that even with the several million dollars in planned expense cuts for 2011-2012, the schools' financial pressures won't wane any time soon. Just to cover existing benefit costs, a tax increase between three and four percent would be needed in future years, according to Ammerman's projections.

That number does not include consideration for salary increases or new debt for building upgrades.

At the same time, state-controlled tax-increase limits are likely to be less than four percent annually in the coming years, school leaders have said. In that context, additional cost reductions in future budget cycles appear very likely.

Meanwhile, the 2011-2012 school budget remains in some limbo. State budget negotiations now happening in Harrisburg could ease the proposed K-12 spending cuts and restore as much as $1 million -- or more -- in planned funding to the State College district.

District resident Beth Egan, the third and final resident to address the board Monday, asked how the distirct may use that money if it materializes.

"We'll have those discussions at the time -- if it becomes a reality," Ammerman said.

For now, the $111.6 million district spending plan includes more than $2 million in budget-balancing cuts. Those reductions include more than $1.1 million to be saved by cutting 17 positions via attrition; more than $600,000 to be saved by cutting 14 jobs via outside-the-classroom layoffs; and more than $450,000 to be saved through in-classroom layoffs and demotions together involving eight positions. The in-classroom layoffs and demotions are necessitated by declining district enrollment, according to the administration.

Budget discussions are scheduled to continue at the board's June 13 board meeting. A final district budget vote is scheduled for June 27, though the budget may be reopened later in the year if the state budgeting process is prolonged beyond this month.

Official budget information from the district is provided through its website, which also provides a drop box where residents can send feedback to the board and administration.

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