Scranton School District 2016 budget includes $18 million deficit

Nov. 20--With uncertainty about state funding and increases to special education, pension and health care costs, the Scranton School District faces a 2016 preliminary budget deficit of $18 million.

"I honestly do not know where that's going to come from," school board President Cy Douaihy said after Thursday's special meeting at which directors passed the $150 million budget unanimously. "I'm terrified."

While the district's preliminary budgets routinely include "wish list" items from administrators and some bloated costs, the 2016 deficit is unprecedented. The budget may lead to program cuts, layoffs or higher taxes.

Property owners could see school taxes increase by as much as 2.8 percent -- or about $33 for a property assessed at $10,000. That tax increase would only raise an additional $1.1 million in tax revenue. The district has not yet learned whether the state will allow an exception for a higher rate, but any tax increase permitted by the state would not come close to covering the deficit.

Directors must pass a budget -- and any tax increase -- by the end of the year.

For 2015, the district borrowed $10 million to balance the budget. The district may again look to refinance debt, called "scooping," which would provide temporary financial relief by deferring debt and extending it into the future.

Any action for 2016 is separate from the funding the district is trying to secure due to the state budget impasse. Earlier this month, the school board approved a $14.3 million tax anticipation note and voted to file a petition with the court to take on as much as $32 million in unfunded debt to pay off that note, as well as a tax anticipation note issued earlier in the year. The district is one of only two in the state with a calendar-year budget.

Without knowing how much the district could receive in state funding for 2016, the preliminary budget includes a slight decrease in state revenue, due to increased costs from charter schools. Total revenue is budgeted at $132 million.

School directors first saw the budget on Thursday and did not publicly discuss the budget prior to the vote, the only item on the agenda. No members of the public were present for the vote.

The budget includes:

--$3.3 million in additional state-mandated pension costs.

--An additional $6.3 million for health insurance.

--An increase of $840,000 for workers compensation.

--$1.2 million more for special education, increasing the department total to $21.4 million.

Despite a new teachers contract, total costs for non special-education salaries decreased.

After the meeting, Mr. Douaihy called the budget "sobering."

"I don't want to cut programs, but I don't know what we're going to do," he said.

With program cuts, layoffs could also be a possibility, he said.

Budget and Finance Committee Chairman Kyle Donahue, who is wrapping up his term on the board, said he has warned directors that this deficit was coming.

"The new board is going to have to make decisions on how to fund it," he said.

Three new directors will take their seats on the board early next month. Budget hearings have not yet been scheduled.

Contact the writer: [email protected], @hofiushallTT on Twitter

___

(c)2015 The Times-Tribune (Scranton, Pa.)

Visit The Times-Tribune (Scranton, Pa.) at thetimes-tribune.com

Distributed by Tribune Content Agency, LLC.