T/E School Tax Increase Wins Final Approval

The Tredyffrin Easttown School Board of Directors voted Monday to approve a 3.77 percent increase in school taxes. The increase amounts to $171 for the average homeowner in the district. The money will fund a $109 million operating budget for the 2011-2012 school year.

The 7-2 vote came after six months of board discussions and wrestling with how to pay for gaps in the 2011-2012 school budget, and after wage freezes, salary concessions and lay-offs among non-instructional district unions, teachers and professional staff.

Even with the tax increase, the budget approved Monday night will use nearly $2 million from a projected general fund balance of $29,561,816 to close a budget gap and reach a mandatory balanced operating budget for the 2011-2012 school year.

Future budget projections look bleak

The school board voted to dip into the district's general fund balance for the upcoming school year. The budget projections presented to the board last night show a far more serious budget crisis looming in the next five years. 

According to figures presented to the board Monday by the administration, that general fund balance (money the school district has on hand after meeting all expenses) is projected to go from just about  $27 million for the 2011-2012 school year to a $22.2 million deficit by th 2015-2016 school year.

Making that general fund deficit forecast even more grim is that the projections assume no salary or wage increases for district employees after the 2011-2012 school year.

Board discussions and debate Monday night centered around the desire to keep academic programs and services in place versus hitting local property owners with another tax increase in a tough economy. School taxes have been raised every school year since 2005-2006. Complicating the decision for many board members is a state law that could limit the ability of local school boards to raise taxes if needed in the future.

The tax dilemma facing T/E and local school boards around Pennsylvania

Under Act I, T/E's school tax rates for the 2011-2012 could only be increased 1.4 percent unless the district applied for exceptions. T/E did apply—and was granted—exceptions to allow for the higher tax increase of 3.77 percent.

The dilemma facing T/E and other school districts is that state law currently requires local school districts to "use it or lose it" when it comes to exceptions for tax increases above the Act I formula guidelines. Many members of the T/E board expressed concern that if the district did not "use" the Act I exception allowing for a 3.77 percent tax increase now that money would not be available in the future.

Even if (for the point of discussion by the board) there were to be no pay increases for any district employees after the 2012-2013 school year, other operating expenses, plus pension and benefit costs will continue to climb.

According to administration forecasts presented to the board Monday night the district faces a $22.2 million general fund deficit in the 2015-2016 school year. Faced with that projection, several board members said they would vote to use the exception and raise taxes now rather than face an even bigger potential budget shortfall in the next five years.

The final budget, including the tax increase passed by a 7-2 vote with board members Debbie Bookstaber and Richard Brake voting against it.