Weatherly Area considers first tax increase in 5 years

Dec. 03--A state budget stalemate and the rising costs of retirement contributions and employee health care plans could result in the first property tax increase in five years for homeowners in the Weatherly Area School District.

The school board received a grim financial outlook for the 2016-2017 fiscal year during a late-running budget meeting Wednesday, with Business Manager David Marsiglio presenting a budget proposal that contains a projected $124,015 increase to the district's contribution to the Public School Employees' Retirement System (PSERS) and an estimated

5 percent increase on health care costs that range between $1.5 million and

$1.7 million.

Revenue and expense reports released Wednesday state that Weatherly Area's employer contribution rate to PSERS would increase from $647,925 this year to $771,940 in 2016-2017.

A gaping shortfall, meanwhile, is projected for the overall budget.

Marsiglio prepared budget reports for the 2016-17 fiscal year that project a $2.2 million shortfall.

According to the reports, $13.75 million in expenditures outpace estimated revenue of $11.56 million.

Those projections are based on local, state and federal funding sources -- as well as a conservative local tax collection rate of 90 percent, the business manager noted.

"I try and go conservative for the revenue and aggressive in expenses," he told the school board. "Otherwise, if an unanticipated expense occurs ... it's hard to cover."

The nearly $2.2 million projected shortfall would decimate the district's

$3.77 million fund balance.

Marsiglio said the district finished 2015 with expenses exceeding revenue by $1 million. He expects the trend to continue at the conclusion of the 2015-2016 fiscal year, when the district is projected to finish $1.7 million in the red.

If the budget projections stand as presented Wednesday, the nearly $2.2 million shortfall projected for 2016-17 would deplete the fund balance and leave the district with a deficit of nearly $126,000, according to budget documents.

If the district doesn't use the fund balance, it would have to raise taxes by 17.49 mills, or 43.23 percent, to cover the shortfall, budget documents state. School directors and the business manager agreed that the latter of the options isn't feasible.

The property tax rate is currently set at 40.46 mills.

With the school budget deadline process beginning earlier in an election year, Marsiglio said the board will have to decide at its Dec. 9 regular meeting whether it will agree to raise taxes up to an index established under state Act 1 (and not exceed that cap) or vote to advertise a preliminary budget that would raise millage beyond the index.

The Act 1 cap would allow the board to raise taxes by up to 1.26 mills, a 3.11 percent increase, which would generate about $158,458.

Board members agreed to consider a resolution to raise taxes beyond the index -- but emphasized the resolution doesn't obligate them to follow through with a larger increase.

School directors reacted bitterly to the budget projections, with President Girard Fewins asking why changes the district made in negotiating employee health insurance contributions seemingly aren't reflected in next year's budget.

With the state budget impasse jeopardizing schools, board member Matthew vonFrisch asked whether the district should consider temporarily withholding its scheduled payment to PSERS.

Marsiglio offered to research ramifications of delaying the payment.

The school board can't furlough staff unless it eliminates specific programs, Marsiglio noted.

The state budget impasse also has officials concerned for potential disruptions.

Marsiglio told directors that the district has about $4 million in cash available to continue operating through February -- or possibly March.

If the state budget impasse continues through Christmas, Marsiglio said he'd seek approval from the school board to hiring a financial advisory service for obtaining funding.

Director Gerard Grega, however, suggested shuttering schools instead of incurring costs associated with borrowing money.

Grega said school closures would be disruptive to students and cause an uproar from the public -- and might be the only way to get the attention of state legislators.

Director Corey Gerhart, meanwhile, said that while Weatherly Area schools are generally in good condition, he noted that the facilities have outdated lunch tables, bleachers that will one day need to be replaced and gymnasium floors that have never been completely replaced since they were installed.

He asked what the district would do if it had to take on such a large-scale initiative.

Gerhart said the district could subsequently consider charging fees to attend athletic events, institute a pay-to-play initiative for student athletes or consider other alternatives that would hurt students, such as asking parent-teacher groups or parents to offset the cost of field trips.

Fewins said he wouldn't support any initiative that would hurt students. Gerhart agreed, but said the district has few options.

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