Money Talks: Seneca Valley Officials Mull Options For Closing $4.8 Million Budget Shortfall
School board members have until June to approve a finalized budget for the 2012-13 school year.
Although it’s early in the process, Seneca Valley officials are readying for another tough budgeting year.
Superintendent Dr. Tracy Vitale on Monday presented school board members with a number of alternatives for closing a predicted $4.8 million funding shortfall for the 2012-13 school year—including a tax increase.
Other options to balance the budget are exploring potential new revenue sources, reducing building costs, cuts to personnel and increasing student activity and parking fees.
“We must plan for the future,” Vitale told the officials. “The decisions in next few months will impact the district not just next year, but for many years to come.”
Vitale noted the state has approved the district’s application for exceptions under Act 1, allowing Seneca Valley to raise property taxes beyond the allowed 2-percent index calculated for it. For Seneca Valley taxpayers, that index equals 2.11 mill.
Each mill of tax yields about $500,000, meaning a 2.11-mill increase would bring in about $1.1 million for the district.
Vitale said the approval from the state Department of Education permits Seneca Valley to increase property taxes by another 3.6 mills. This allows the district to up property taxes up to 5.71 mills—and bring an additional $1.85 million to the district.
Although it gives them the option to do so, this does not mean district officials plan to raise property taxes to the max amount allowed by the state.
Vitale said even if district officials opted to increase property taxes by 5.71 mills, that alone would not be enough to balance the $4.8 million shortfall the district faces next year.
Instead, board members will mull over what combination of options—including the tax increase—they want to use to close the gap.
Officials also are meeting with teacher, paraprofessional and custodial union leaders to discuss options. Teachers are in the first year of a five-year contract approved in September 2010. Paraprofessionals have one year left of their contract while the custodial union contract is expired.
Reviewing Revenue Sources
One potential new revenue sources is selling the rights to a 150-acre property the district owns along Ehrman Road to a natural gas exploration company.
The property—which the district bought for $4.2 million in 2002—straddles Jackson and Cranberry townships. It once was under consideration for new buildings after a predicted spike in school population.
Vitale added the district may only sell property rights to drillers in the Marcellus Shale on the Jackson portion of the property.
“We are not permitted to do so on the Cranberry side,” she said.
And that’s only if there is a gas exploration company interested in the property.
Describing the outlook as dismal, Vitale said there currently are no drilling offers because of an overabundance of properties Marcellus Shale companies have tapped for drilling.
“The Marcellus Shale companies are telling us they have more property then they can keep up with in drilling,” she said.
Other revenue-generating options are selling a one-acre, residentially-zoned property that once housed the district’s water tower, selling ad space on the district website and school publications, garnering rental fees for an extended daycare at school facilities and charging universities a $200 flat rate for each college student allowed to teach in the district as a student-teacher.
Vitale estimated there are between 50 to 60 student-teachers at Seneca Valley each year. Charging higher education entities for student teachers also is being explored at neighboring schools districts, she added.
“I am not a big fan of it, but I must say, we have to look at every item,” she said.
Cost Reductions, Personnel Cuts and Fee Increases
Options listed under cost reduction include refinancing several older bonds— which would save the district about $45,000—eliminating summer school at the elementary level, instituting a four-day work week in the summer months and savings made through retirement attrition.
Officials also may consider eliminating three administrative positions as well as replacing a retiring administrator with someone at a lower salary. Other options include laying off 9.5 teachers at the secondary level—which would save the district about $636,500—and reducing hours for the district’s paraprofessional staff
School board members also will discuss increasing athletic activity fees from $75 to $125, upping non-athletic performance fees from $25 to $50 and increasing student parking permit fees from $60 to $75 per semester. Vitale said fees would continue to be waived for students who are part of the district’s free and reduced lunch program.
Other options investigated, but not recommended by district officials, include cutting the JROTC program—which survived the chopping block last year—and the swim program.
Funds for the Future
Vitale and business manager Lynn Burtner also stressed the importance of not depleting the district’s fund balance, which currently sits at about $8 million.
Burtner said a fund balance is need to qualify for low-interest rates should the district need to borrow money or refinance existing debts. Because real estate taxes don’t come into the district until September, the fund balance also is used to make payroll and buy supplies in the summer months. The money also is reserved for emergency repairs.
Officials are expected to discuss the options in more detail at the next school board meeting at 8 p.m. on April 16.
The proposed preliminary budget, which is available online on the district’s website, shows revenues for the 2012-13 school year at $94.8 million. Expenditures are at $99.6 million.
This also isn’t the first time the district has faced a significant funding shortfall.
Last year, school board members addressed a $10 million budget deficit for the 2011-12 school year by approving a $94 million spending plan . The plan included a 5.6 mill increase in property taxes and the curtailment of a half-dozen district programs.
Officials are not required to approve a final budget until June.