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Will SCASD Have a Tax Increase in 2021-22? Here’s Where the Budget Stands

The State College Area School Board on Monday approved a proposed final 2021-22 budget that includes no real estate tax increase, but that could change before the final budget is adopted in June.

As it stands, the proposed budget — which includes revenues of $167,859,087 and expenses of $166,962,817 — maintains the tax rate at at 46.0875 mills for the third consecutive year. The projected unassigned general fund balance would be $13,223,859.

Largely due to uncertainty related to the economy, however, district expenses are projected to begin outpacing revenues in 2022-23 and continuing through 2031. Such a deficit could lead to a negative fund balance as early as 2026-27.

“This is something we have known. We have just been trying to prioritize looking at the first year budget and then in the first five years,” Randy Brown, SCASD finance and operations officer, said. “But as we continue to look out further … we believe that we need to have some further conversations.”

Before a final budget is adopted, district administrators asked the finance and audit committee to consider two tax rate alternatives to help stem the projected future deficit: a .5% increase or a 1% increase.

The smaller increase would generate $535,397 in tax revenue in 2021-22 and $6.1 million through 2031. A 1% increase would generate $1,070,793 for the coming year and $12,322,289 through 2031. Both scenarios would reduce the deficit by 2031 and provide increased support for funding student programs.

With no tax increase, the average residential taxpayer with an assessed property value of $73,391 would have a school district tax bill of $3,314 in 2021-22. With .5% that would increase by $17 and 1% by $33.

Administrators project an increase of 1% next year and 2% in the following years through 2031.

The school board is required by law to have a proposed final budget at least 30 days before adopting a final budget. But Brown said it is permissible to make changes before the final vote on June 7.

“It’s allowable by law and it’s something … in my 16 years has happened with different boards and different budgets,” he said. “It isn’t necessarily common but it is legal and can happen.”

The finance and audit committee will discuss the budget and long-term projections further during its meeting on May 12. A budget hearing will be held at the school board’s May 24 meeting.

As usual, a large majority of the budget revenue — 78% —comes from local real estate tax revenue. Another 19% comes from state sources and 3% from federal sources.

Both the projected collection of real estate taxes (96%) and assessed value growth (.8%) are slightly lower than typical, resulting in lower local property tax revenue for 2021-22. Earned income tax is budgeted for a 1% growth, up from the projected loss for the current year but lower than the average of 2.5% in other recent years.

Federal revenue reflects $3.4 million in relief funding that was part of the American Rescue Plan passed in March.

Salaries and benefits comprise about 75% of expenses, followed by services (10%), capital-related transfers (9%), supplies and equipment (5%) and other transfers and fees (1%).

New recurring expenses include a half-time social worker that had been grant funded for the current year, a half-time psychologist, full-time custodian and three full-time faculty positions and costs for the Virtual Academy. New non-recurring costs include expenses for lost learning funded by the federal relief money, funds that must be spent within three years.