Shamokin Area expects minimal tax increase to balance this year's budget
COAL TOWNSHIP - If taxes are raised this summer on property owners in Shamokin Area School District, it will be minimal.
The maximum tax hike the school board could seek is 0.6869 mills, Steve Curran, business manager, confirmed last week. At the most, that's about an additional 69 cents on each $1,000 of a property's assessed value.
That would generate about $65,000 based on the district's 84-percent collection rate - hardly enough to erase the projected $2.8 million general fund budget deficit for 2013-14.
The furloughs, budget cuts and financial wrangling that resulted from last year's budget negotiations don't appear on the horizon this year, according to Brian Persing, school board president. He expects the deficit will be erased using reserve funding.
"It's going to be a quiet year budget-wise," he said. "I don't anticipate any cuts. We're better off financially than we were last year."
The nine-member Shamokin Area School Board approved a resolution Tuesday to not seek a property tax hike beyond the rate of inflation, which is set by the state Department of Education at 2.6 percent for the district.
The resolution is part of the Property Tax Relief Act adopted in 2006 to regulate the size of proposed tax increases. It uses the rate of inflation to determine an allowable tax increase. A proposed increase beyond the inflation rate needs voter approval.
However, districts can seek exceptions for costs incurred for school construction prior to the law's adoption as well as voter-approved debt, certain special education expenditures and retirement contributions.
Curran said Shamokin Area wouldn't be seeking any exceptions.
Taxes are levied against a property's full assessed value. Each mill equals $1 for every $1,000 of the assessment.
The district's current millage is 26.4195. For a home assessed at $30,000, the district tax bill would be $792.59. If the maximum increase were enacted, the total millage would rise to 27.1064, bumping the above billing example to $813.19.
Next school year's proposed deficit is half of the $5.6 million deficit faced entering 2012-13, but hardly a drop in the bucket.
School board directors struggled last year to make up the deficit, cutting spending on equipment, privatizing cafeteria services, entering an employment contract with Northwestern Academy, pushing early retirement incentives and eventually furloughing 22 staff members, 15 of whom have since returned and two others who resigned or retired.
After all that and more, $1.4 million of reserve funding was necessary to balance the budget.
There is about $6 million currently in Shamokin Area's reserve account, Curran said. Take away the $1.4 million still earmarked for this school year and the $2.8 million projected for next school year, and that leaves $1.8 million in that account.
"In a perfect world, you really shouldn't use any," Curran said of using reserve funding to balance the general fund budget.
Looking toward 2014-15, Curran has worries.
Insurance and pension costs continue to rise, with the district's contribution to Public School Employees' Retirement System to jump from 12.36 percent to 16.75 percent, of which the state is responsible for half.
Of the $2.2 million tax revenue budgeted by the district, it took in $1.7 million through year's end, Curran said. If state education funding remains at or near its current level and the local tax collection rate drops, and with little left to cut from Shamokin Area's spending, he said a depleted reserve balance "really leaves us in a bind for the following year."
"It gets hairy. I worry every year. If the economy goes bad in any household, what's the last bill that will be paid? Probably the tax bill," he said.
Persing said the district must tighten its belt, keep an eye on spending and, next year, hope for more money from the government.