As it begins preparation for its 2010-11 fiscal year, the Tamaqua Area School District is proposing a 1.25 mill real estate tax increase in its preliminary budget.
Business manager Connie Ligenza presented details for a $27.4 million spending plan to the district's board of education Wednesday evening during a workshop session at Tamaqua Area High School.
The preliminary budget features a 5.93 percent increase in expenditures over the final 2009-10 budget of $25.9 million.
Among the factors impacting the budget is a whopping 72 percent net increase in the district's contribution to the state's Public School Employee Retirement System (PSERS), which is rising from 4.78 percent this year to 8.22 percent in 2011, a net cost of $435,055 to the district and an increase of $182,193.
The PSERS rate situation is not to be taken lightly. By 2013, the contribution rate is expected to rise to 29.22 percent, almost three times the 2012 rate of 10.59 percent. Tamaqua Area's increase would be over $1 million for that year alone.
"There's not enough money in Tamaqua to fund that," said school board President Larry A. Wittig. "Politically, the state will have to do something, or else we'll have 502 bankrupt school districts. It will have to address this in some way."
While the district will realize a savings of $420,613 in salaries due to the retirement of 12 teachers at the end of this school year, the board is currently negotiating contracts with its professional staff and service employees. Both pacts will expire this year.
"We have 64 percent of our budget taken up by salaries and benefits. I don't believe in raising taxes unless you absolutely need it, but with two contract negotiations, if we don't want to keep raising taxes every year, we have to be proactive," said Wittig. "Everyone would like to have five-year contracts, but I don't know if that will happen, given the current economic conditions."
While Wittig admitted that the board has gotten some issues off the table in negotiating with the teachers and service personnel, salaries and premium share on health care costs must eventually be resolved.
For the preliminary budget, Ligenza has kept the status quo moving forward with salaries, budgeting three percent increases for the teachers' contract, 40 cents per hour more for the service personnel and a 2.7 percent cost of living increase for administration.
If the property tax increase holds, it will be the first for the district since 2007, when the millage rose from 30.36 mills to the current rate of 32.11. One mill generates $269,454 in revenue.
Under the proposed hike, residents would have to pay $1.25 more per every $1,000 of assessed property value. A property owner with a home assessed at $10,000 would pay $333.60 next year, an increase of $12.50 over this year's tax bill of $321.10.
Ligenza is projecting the district will realize $8.8 million in real estate tax revenue next year, based on a 90 percent collection rate, with the homestead/farmstead reduction included.
The preliminary budget calls for $26,001,801 in revenue which, when added to a beginning fund balance carry-over of $3,766,884, provides a total fund balance of $29,768,685. With anticipated expenses at $27,438,430, the district would be left with an unreserved fund balance of $2,330,255.
Over the past decade, Tamaqua Area's fund balance has hovered between a low of $1.7 million and a high of $4.3 million.
"We've managed the fund balance and kept it at an appropriate level," said Ligenza.
In discussing expenses, Ligenza said the district is also being hit with big increases in cyber charter school tuition.
"Tamaqua has an extraordinarily high number of students enrolled in cyber schools," she explained, noting an increase of 13 students for a total of 63. The district is responsible for paying tuition for its resident cyber students, and that amount has increased 33 percentor an additional $162,000.
"The cyber laws were written years ago, and didn't anticipate this kind of growth," said Superintendent Carol Makuta.
In addition to the budget numbers presented, the board will also consider the district's "Board Approved List," which includes items proposed by the principals and other administrators that are outside their regular site budgets. Those wish list items totaled $573,222.
Also to be considered is a list of capital projects, mostly repairs and upgrades to buildings and facilities, that totaled $2.6 million.
The board must adopt a preliminary budget in May, with final adoption due by June 30.
Budget discussion will continue at the district's finance committee meeting on April 13.
"We're doing well, but we're going to trim this down," said Wittig.