School Board Proposes Maximum 4.47 Tax Increase for 2012-13

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The Upper Dublin School District presented its initial 2012-13 preliminary budget on Monday, three weeks earlier than years past due to an accelerated presidential election year cycle. The budget proposes a maximum real estate tax increase of 4.47 percent, which now represents the highest possible amount that the district could raise taxes.

"Tonight is the very first look at the budget for 2012-13," said district business administrator Brenda Jones Bray. "Any budget is filled with assumptions, particularly when you're planning this far ahead."

The increase is composed of three parts: 1.7 percent for the state Act 1 Index, 1.32 percent for PSERS and 1.45 percent for special education expenditures. PSERS, a state administrated retirement program, and the special education expenditures are both "exceptions" that the board can choose not to pursue, and thus eliminate them from the tax increases.

Deliberations on whether or not to file with the state for those exceptions will occur over the next few months. Any exceptions must be filed with the Pennsylvania Department of Education by February 9; however, a final decision on whether or not to use exceptions can come as late as May or June.

"Right now, the administration is recommending that the maximum we would tax is 4.47 percent," said board member Art Levinowitz. "That's the number we'll start with, and then go from that number. We'll be having a number of meetings after the new year to go over the budget in much greater detail."

The proposed budget shows $82.3 million dollars in revenue for 2012-13, balanced against $85.7 million in expenditures. As currently proposed, the board expects a $3.4 million fund balance at the end of the 2011-12 year, which will be used to cover the gap between revenue and expenditures, leaving the district with an estimated $25,433 fund balance at the end of 2013.

Administrators estimate district is $3.1 million under budget for 2011-12

Those who followed last year's budget discussions closely may remember that the board weighed proposals ranging from 3.33 percent to 5.85 percent tax increases in order to add funds to the budgetary reserve. The board on a 4.32 percent increase, which would leave the district with $241,714 at the end of 2011-12.

However, Bray presented the board with a revised estimate of the 2011-12 budget, four months into the school year, which now shows an ending fund balance of $3.41 million, or an additional $3.1 million.

The surplus funds come from three areas: increased revenue, decreased expenditures, and leftover fund balance.

$1.55 million in additional revenues

UDSD now estimates that it will have an additional $1.55 million dollars in revenue, with roughly $800,000 coming from local revenues, and $700,000 coming from the state.

Bray says that the majority of the local revenues come from somewhat unexpected reimbursement for payments to Holy Family Institute, which is technically supposed to be a budget neutral item. UDSD is supposed to pay tuition first, and then receive reimbursement from the Philadelphia School District. However, Bray says the district usually budgets conservatively.

"It can be a little difficult to get money from Philadelphia," said Bray.

The additional revenues from the state are due to a change in FICA reimbursements, according to Bray.

"You may recall last year that when [Governor Corbett] came out with his first budget, that our FICA reimbursement had decreased from 50 percent to 15 percent," said Bray, adding that the number had been restored to its original 50 percent for 2011-12.

District is $286,640 under budget in expenses

The district also now estimates that its expenses will run roughly $286,000 under budget. General education expenses are estimated at roughly $600,000 under budget, lead by $215,000 being saved under "supplies," and $130,000 under both "other purchasing services" and salaries.

"Those estimates are only 37 days into the school year, and how much has been spent to that date," said Bray. "We're going to revise those numbers [moving forward]…it is a bit of a timing issue as teachers receive a lot of supplies in early September and we don't see the invoices until November."

Even if the estimates hold, those numbers were nearly offset by a $500,000 increase in expenditures in special education, which Bray says is mainly additional expenses allocated to Saint Mary's Villa.

"They had more students than we had budgeted," said Bray. "However, Saint Mary's [owes] tuition and we hope to wind up equaling expenditures."

$1.3 million in additional fund balance

The 2011-12 budget predicted a starting fund balance of $4.62 million. However, new revised estimates show that the fund balance is $5,951,210, an increase of $1.3 million that Bray says is the result of a one time state accounting change.

"We had something called 'GASB 54,'" said Bray. "And it made a change and required that instead of leaving a deferral on the balance sheet for assessment appeals and other [contingencies], that we can no longer do that and it had to be included in the fund balance."

What's next?

It should be noted that all numbers are subject to change, as the district revises its 2011-12 estimates through the budgeting process. However the 4.47 percent real estate tax increase marks the highest possible increase, by law. The public will have its next chance to comment on the budget at the board's next work session on Tuesday, January 3 at 6:00 in the cafeteria.