Tough budget decisions await South Middleton school board members

Feb. 25--One thing's for certain: Tough decisions on possible staffing and program cuts are ahead for South Middleton School District and its board of directors.

Preliminary numbers project an estimated $2.9 million deficit in the 2017-2018 budget at a time when the district has no fund balance to draw from and could only raise about $400,000 in new tax revenue under the Act 1 Index, according to Matt Ulmer, district business and operations manager.

"There is no help on the way," said Board President Michael Berk, adding that Gov. Tom Wolf's proposed state budget makes no mention of pension reform.

This means school districts will continue to pay the price for state lawmakers not doing the job of correcting the problem that is costing taxpayers a higher local percentage contribution to the Pennsylvania Public School Employees Retirement System, Berk said.

"As one board member, I really hate to see us cut programs or things that affect the kids," he said. "We will see how all this plays out."

South Middleton plans to seek exceptions under Act 1 that would enable the board to raise taxes without a referendum beyond its index of 2.5 percent.

The district has until March 2 to file paperwork with the state Department of Education seeking exceptions to offset special education costs, the increase in the local PSERS contribution and payments on debt incurred before 2006 when Act 1 took effect, Ulmer said.

If South Middleton qualifies for one or more of the exceptions, the board could increase the millage rate only to the point where the revenue generated offsets the special education costs, the PSERS contribution or the debt. The state agency has until March 22 to rule on the district's request for exceptions, according to the official Act 1 timeline for school district budgets.

The board will have to wait and see if the district qualifies for any exceptions under Act 1 that could help offset more of the projected deficit, Berk said. He said that, meanwhile, district administrators are meeting with faculty and staff at all district buildings to gather their input on what could be done to cut the deficit and preserve education programs.

District administrators could present an update on the budget as early as the April 3 board meeting, Berk said. This should give the board time to understand and examine the options available to offset the projected shortfall.

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"We have a great board," Berk said. "We know we have to make some difficult decisions."

The district is following the Act 1 timeline to qualify for exceptions in an attempt to give the board every possible option to generate as much revenue as possible, Ulmer said.

"We have a ceiling," said Berk, adding the district would have to adjust to any additional unfunded mandates from the state. Berk mentioned, for example, that the Wolf budget proposal includes a $50 million cut in transportation subsidy to school districts.

A finance committee was formed in January to serve as a conduit between the district business office and the school board. The main purpose of the committee was long-term financial planning beyond the 2017-2018 fiscal year, Ulmer said.

This includes coming up with solutions to rebuild the district fund balance and to account for future growth, Ulmer said. He said the committee's tasks also include risk assessment analysis that examines the consequences and possible options if a major commercial property owner closed shop.

Berk said the committee is looking at ways to limit or control large budget deficits in the future. So far, there have been three committee meetings with a fourth meeting scheduled for 6 p.m. March 6 at Boiling Springs High School. Committee meetings are public.

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