News Column

Carlisle school board: 2.6 percent tax increase necessary

June 25, 2014

By Joseph Cress, The Sentinel, Carlisle, Pa.

June 25--CARLISLE -- It was by necessity the Carlisle Area School District had to push the percentage of the real estate tax increase to the maximum allowed under the Act 1 index, school board members said Tuesday.

The board last week voted 8-0 to adopt a final $72.6 million budget for 2014-15 that calls for a 2.6-percent tax increase. Board member Gerald Eby was absent Thursday from the regular monthly meeting.

The real estate tax will increase 0.3277 mills, from the current rate of 12.6056 mills to 12.9333 mills. Homeowners can expect to pay an additional $32.77 on every $100,000 of assessed property value.

"No one liked the idea of a tax increase, but it was something that was felt was necessary in order to protect the educational program," board president Nancy Fishman said.

This was the first time in three years the board had to go with the maximum percentage, board member Tim Potts said. "Two years ago, the index was 2.1 percent. The board raised taxes 1.2 percent. Last year, the index was again 2.1 percent and the increase was 1.9 percent."

A spike in health-care costs is driving the need for the maximum, along with the increasing expense of covering the contribution school districts make to the Public School Employees' Retirement System, Potts said.

"Just those two things will cost the district more than the amount of money raised from the tax increase," he added. "We are filling a void with a combination of cuts and $1.5 million from reserves. The most important (part) about this budget is we do not have to cut programs for the kids."

Administrators estimated the projected increase in the PSERS contribution next year would absorb about $664,000 of the $950,000 in additional revenue generated by the tax increase.

Solving pension debt

Aside from the budget, the board approved a resolution that calls on state lawmakers and the Pennsylvania School Board Association to push for legislation that would establish a temporary financial transaction tax devoted exclusively to solving the state's pension debt problem.

The board resolution mentioned how the share of property taxes required for pension payments has increased by 1,976 percent in the Carlisle Area School District since 2001. Meanwhile, Act 1 has limited the ability of the district to raise revenue to offset the increase.

"Every legislative proposal to date to solve the pension debt problem relies exclusively on higher local property taxes for at least the next 30 years," the resolution reads. "Pension experts agree that the only solution to Pennsylvania's pension debt problem is a dedicated source of revenue over a sustained period of time."

Carlisle school district cannot spend down its reserves to offset the pension debt without jeopardizing its Moody's AA2 bond rating, Potts said. He added a higher bond rating means the district can borrow money more cheaply, which in the long run saves taxpayer money.

Depleting the reserves to pay the pension would mean the district would have to start cutting the education program for students, Potts said. State law also requires school boards to pass a final budget by June 30 -- usually before the Pennsylvania General Assembly adopts the final state budget for the next fiscal year.

School districts across Pennsylvania receive an annual state subsidy for basic education and special education that make up a significant portion of the revenue stream districts need to operate.

Because of the difference in timing in budget approvals, it can be difficult for school districts to know for sure how much state revenue they can expect in the coming year, Fishman said. "It is a very educated guess based on trends over the past few years, but we are still taking a guess."

Potts called the difference in the time line "ridiculous" and "absurd." It is a dysfunction of Pennsylvania government that school districts cannot have a rational budget process because the state budget process is such a mess, Potts said.


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Source: Sentinel, The (Carlisle, PA)

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