Early Erie School District budget shows $7.4 million gap

Feb. 01--The numbers tell a story of a school district like many others, still challenged by stagnant revenue and rising costs.

The Erie School District's proposed preliminary budget for 2015-16 is about $7.4 million in the red, a deficit district officials say is largely driven by increases in charter school costs, state-mandated pension contributions and health insurance, among other factors.

At $157.2 million in expenses, the proposed budget is roughly 4.7 percent larger than the $149.8 million budget for 2014-15.

The district is expecting charter school costs to increase by $3.45 million, up to about $20 million -- roughly one-third of the district's annual basic education subsidy from the state.

Pension contributions will also increase by $1.3 million, after reimbursement by the state, and health-care costs by about $500,000.

The early budget does not include any tax increase and assumes no increase in funding from the state for the coming school year.

"A preliminary budget simply outlines our starting position in terms of anticipated revenues and expenses for the following year," district Director of Communications Matthew Cummings said. "Heading into this budget season there are really a lot of unknowns as the administration and Legislature in Harrisburg are working hard to tackle three key areas that will impact school financing in Pennsylvania: the funding formula revisions, charter school (funding) reform, and pension funding."

The rising expenses and uncertainty of the state budget -- Gov. Tom Wolf is not expected to announce his state budget proposal until March 3 -- prompted the Erie School Board's December decision to not pass a resolution committing to stay under the Act 1 tax ceiling set by the state.

The state's property tax relief law sets an annual tax ceiling, or index, that districts cannot go above without receiving an exception from the state or holding a public referendum. The index for Erie is an increase of 2.9 percent in 2015-16.

District Business Administrator Rick D'Andrea recommended that the board not pass a resolution committing to stay under the ceiling, and said the district might pursue an exception from the state to go beyond the index based on the rising pension costs.

Millcreek and Fairview school boards have also indicated they want the ability to raise taxes beyond their respective ceilings if necessary.

Districts that chose not to adopt a resolution committing to stay under the Act 1 index were required to post proposed preliminary budgets for 2015-16 by Thursday, and must approve budgets by Feb. 18. Districts that do adopt resolutions have until May to approve preliminary budgets.

Final budgets must be passed by June 30.

ERICA ERWIN can be reached at 870-1846 or by e-mail. Follow her on Twitter at twitter.com/ETNerwin.

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