Conneaut School Board gets first look at 2022-23 budget [The Meadville Tribune, Pa.]

Apr. 8—LINESVILLE — Conneaut School Board members got their first look at the school district's 2022-23 school year budget at their meeting Wednesday, a financial plan which so far does not contain a tax increase.

The $43.1 million financial plan was reviewed in a presentation by Business Manager Greg Mayle that took up the majority of the meeting's time. While the budget is balanced, Mayle cautioned the board members that the only reason it is that way is due to stimulus money received throughout the COVID-19 pandemic.

Without those stimulus funds, the school district budget as it currently stands would be looking at a slightly more than $3 million deficit. The budget for the current school year had a similar deficit covered only by stimulus funds, but that one amounted to only $1.3 million.

Last year during budgeting season, Mayle had advocated not putting in a tax increase for the 2021-22 budget in order to see how finances might shape out as the pandemic wanes. Unfortunately, expenses have continued to increase while revenue has not kept at pace.

As such, Mayle is recommending the school board begin looking at ways to close that deficit while it still has stimulus funds to tide over deficits.

"Our operating deficit is growing through COVID, and so that's not the news we're hoping for, but that's the reality we're living in," he said. "Because of that, examinations of revenues and expenditures should start occurring now."

The school district still has most of its stimulus money left over. In the course of the three stimulus bills — the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Coronavirus Response and Relief Supplemental Appropriations (CRRSSA) and American Rescue Plan Act — the school district received a total of $10.5 million. Of that, $2.8 million has been spent, including the entirety of the CARES Act funding, leaving the district with $7.6 million to utilize.

However, those funds have a deadline, with all of them expiring by Sept. 30, 2024, and a few of the remaining ones doing so sooner.

"Stimulus funds are here now, and there's a lot of them, but in '24-'25, those funds go away," Mayle said. "So we have three years to kind of plan for that reality."

As for what's driving the expenditures, there are several factors. Some are being felt by businesses and organizations due to inflation costs and difficulty in hiring. For example, Conneaut's budgeted amount for utilities expenditures climbed by 14 percent in the new budget and fuel costs went up 33 percent, to $522,100 and $300,000, respectively. Due to the school board's raising of the pay of substitutes in order to attract more substitute teachers to $150 a day last month, the budgeted amount for subs went up 33 percent, to $487,916.

Wages also saw an increase, though a relatively small one. Expenditures for paying wages went up by 1 percent to $14.6 million, but the increase is 3 percent over projections.

One line item that saw a major increase is regarding health insurance, which climbed by 16 percent to just under $4.2 million, including a 20 percent rate increase for health insurance.

Mayle explained that the school district gets its health insurance through the Northwestern Regional Employee Benefit Trust (NOREBT), a trust handled through HUB International which involves 19 schools mainly in the Intermediate Unit 5 area.

Under this trust, each school involved maintains its own balance based off of how much it puts into the trust and how many health insurance expenditures come out of it. After years of keeping that balance on the positive, Conneaut was hit hard by health insurance claims in 2021 and 2022, and currently has a negative balance of $800,000.

"Basically it means if we were to leave the trust tomorrow, and we say, 'We want a different health insurance provider or different health insurance program, we want to leave,' we would owe the trust $800,000," Mayle said.

While Conneaut is not alone in this matter — Mayle said most schools saw a downward trend in terms of trust balance, and four or five others also have a negative balance — Conneaut has the lowest out of any school in the trust.

Mayle said the trust tracks claims over $25,000 as well as over $68,000. Conneaut is the second highest school in terms of the former category, and the highest in the latter category. Its project cost per employee per month for 2022-23 — just over $1,700 — is roughly the third highest in the trust, according to Mayle.

As such, the 20 percent rate increase is an attempt to dig Conneaut out of the negative balance. Mayle said of the increase, 15 percent is to keep up with costs, while 5 percent is to slowly dig Conneaut out of its debts at a rate of roughly $200,000 per year.

However, he said the school district could see a "good year" in terms of claims, which could also help accelerate getting out of debt.

There are also several unknown factors that could affect the budget. For example, under Gov. Tom Wolf's current budget plan — which Mayle expressed some doubt in passing in its current form — Conneaut would receive an additional $1.25 million, consisting of $1 million in increased basic education subsidy and $250,000 in special education subsidy.

There is also the potential for cyber charter form, as well as any cuts being examined by the board's budget committee.

Mayle also pointed to some optimistic signs. The school district did see a small growth in property assessments of 0.725 percent, equating to $112,385 in additional money. Additionally, thanks to the stimulus covering for deficits, the school district has been able to maintain its fund balance of reserve money since 2019-20 school year of just over $12 million

The budget is expected to change as the finance committee and school board look over solutions to decreasing expenditures and increasing revenue.

"The budget in April is not the budget in June," Mayle said.

Under the budget timeline, Mayle will give another budget presentation at the May 4 work session of the school board, and is calling for a special voting meeting on that date to adopt the proposed budget. Final adoption would occur at the June 8 voting meeting, though Mayle will give another presentation during the June 1 work session.

Conneaut School Board will next meet at 7 p.m. next Wednesday at the Alice Schafer Annex. All board members were in attendance at this week's meeting, though GW Hall and Eric McGuirk attended remotely.

Sean P. Ray can be reached at (814) 724-6370 or by email at .

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