The Pleasant Valley School Board approved the first draft of the proposed 2012-2013 budget of $95,126,234 in a 6-1 vote. Two school directors were absent, H. Charles Hoffman and James Spinola. Board member Dominick Sacci voted "no."
The proposed budget shows an increase of $2,614,797 from last year's budget of $92,511,437.
The proposed budget is at a millage rate of 153.1707 mills, a 4.9 percent increase of 7.1547 mills from the 2011-2012 budget of 146.016 mills. In the PV school district, the average assessed value of a home is $20,650. At this rate, it would be a tax bill of $3,163, which is an increase of $148 from 2011-2012.
PVSD's business manager, Susan Famularo says, "Although expenditures increased between years, fund balance was used in both years to balance the budget. Use of fund balance is necessary as there are statutory caps on the millage rate (Act 1), and it lessens the impact of tax increases."
The budget uses fund balance in the amount of $4.1 million. The budget for the current 2011-2012 year is using $5.2 million of fund balance, or reserves.
This preliminary budget proposes a millage rate that utilizes the maximum tax rate allowable under law. Further budget scrutiny and review by the board and administration has historically lowered the expenditures and the final millage rate, based on more concrete information that will be obtained as the year progresses. The early due date of the budget as proscribed by the state means that there are many estimates used to construct the preliminary budget."
Even with the closing of the Eldred Elementary School in Kunkletown last year, Famularo says expenses continue to increase despite declining staff and student enrollment and revenues continue to decline despite cost savings measures. Employer contributions to retirement, medical insurance costs, energy costs and existing debt service, are the main reasons, she cited, for increases in expenditures.
"A school district cannot furlough teachers for economic reasons under state law. Therefore, costs cannot decline as rapidly for the school district as revenues have. Major sources of increase for the 2012-13 budget are mandatory employer contributions to the PA School Employee's Retirement System (PSERS), increases in medical insurance, energy costs, and increases in the school district's existing debt service schedule," says Famularo.
"Further budget scrutiny and review by the board and administration has historically lowered the expenditures and the final millage rate, based on more concrete information that will be obtained as the year progresses," she adds.
The largest unknown revenue item is state funding. Pleasant Valley lost $3,000,000 in state funding for the 2011-2012 year, which is equivalent to 9.6 mills of real estate taxes. This made the high level of fund balance use necessary for the 2011-2012 year as the school district was required to approve its budget before the governor releasing his budget. Famularo says that prolonged funding cuts will eventually affect district programs.
Governor Corbett will release his proposed state budget in February.
According to a PV press release, based on revenue collection data coming from Harrisburg, the school district may experience a further decrease in state funding and the preliminary proposed millage increase will not cover this shortfall. Further reductions in state funding will increase Pleasant Valley School District's use of fund balance.
The school board and administration will continue to work on revisions and look at alternate ways to increase revenues until the final budget will be adopted sometime by June 30, 2012.
Dominick Sacci, one of the two newest board directors elected in November, was the one dissenting vote for the proposed budget. He said the reason he voted "No" was because "I don't believe we should start with raising property taxes. We should start with what we need and then add what we can afford."
He believes the board must adjust the school operations to the declining enrollment and nothing should be off the table.
"Being in the real estate business for the last 18 years, I've seen people being taxed out of their homes. We've gone from an enrollment of 7,000 students to 6,000, to 5,000. What are we going to do when we reach 4,000?"