Tube City Almanac

July 25, 2012

School District Faces 'Stressful' Financial Year

Category: News || By

McKeesport Area School Directors have wrapped up a financially stressful year only to face yet another challenging fiscal year ahead of them.

Over the last two years, the district has had to find ways to upgrade technology, facilities and curriculum for students, minimize tax increases and staff reductions and generate more local revenue to replace significantly reduced or cut state funding.

"What this board has had to think about and take on over the past two years has been quite the challenge," Superintendent Timothy Gabauer said. "It's not simply isolated to McKeesport, but it's all over."

"There is no simple fix for anything. It takes an awful lot of thought and an awful lot of teamwork," he added.

After several months of work, the school board approved a final budget of over $59 million for the 2012-13 school year. The budget passed by a vote of 6-3, with school directors Mark Holtzman, Joseph Lopretto and Christopher Halaszynski voting against the budget.

The budget includes a 0.44 mill real estate tax increase that brings the 2012-13 tax rate to 17.49 mills, though school officials said the tax rate remains the lowest in Allegheny County. Under Act I, the tax increase is the maximum amount the district can raise taxes without a state referendum.

The tax increase translates into roughly $20 to $21 more per year in real estate taxes for the median assessed household in the district. Averaging the median property value for the City of McKeesport and White Oak based on figures from Allegheny County tax assessments, the median property value is about $48,550 in those two communities.

The district includes the city, White Oak, Versailles and Dravosburg boroughs and South Versailles Township.

Business Manager David Seropian explained that the tax increase is solely to help finance the increase in debt service payments that the district faces this year with the ongoing Francis McClure Intermediate and Cornell Intermediate construction projects.

However, the revenue generated from the tax increase will only cover a fraction of the $1.4 million in debt service payments the district will need to pay this year. According to district figures, one mill generates approximately $715,907, so the increase will only bring about $315,000 more to the district.

. . .

School Director Mark Holtzman praised the business manager's work on the budget, but was again opposed to the tax increase, suggesting that other areas in the budget could still be trimmed, namely the central office.

The board was able to prepare a balanced budget for next year with the help of some restored state funding and a portion of the district's fund balance, but future years are still uncertain, given continual budget cuts and increased expenditures, including the debt service payments.

"There are many, many obstacles out there that we are going to need assistance with over the course of the next couple years," Gabauer said.

. . .

As previously reported, the most significant increase in expenditures for the 2012-13 school year include the debt service payments for the Francis McClure and Cornell construction projects, an increase of $450,455 for charter school tuition and an increase of $861,355 for retirement contributions.

The budget also includes a $2.4 million reduction in real estate taxes through a homestead/farmstead/small business exemption for eligible taxpayers, which is supplied by gaming revenues. The board voted to enact the exemption at its regular meeting.

To balance the budget, the board was forced to use almost $3.1 million of the district's $5.3 million fund balance. Seropian pointed out that the amount of the fund balance needed this year is not significantly more than the previous maximum amount used (almost $2.9 million for the 2010-11 school year).

Offsetting the expenditure increases are the real estate tax increase, the restoration of some state funding and a $763,239 reduction in budgeted salaries.

. . .

Board President Patricia Maksin said the district was able to balance the budget without furloughing any staff. Instead, the board made cuts through retirements, resignations and eliminating positions. Since May 2011, 77.5 support, professional and administrative positions have been eliminated.

"By using attrition we've not hurt any individual or any family or put them in any jeopardy," Maksin said. However, she cautioned that if the board is forced to eliminate additional jobs, it will hurt the district.

Seropian said the final budget includes state funding that the district initially expected to be on the chopping block in the state budget. Initially, Governor Tom Corbett proposed eliminating funding for the Accountability Block Grant, but the district expects the full $404,611 to be restored. MASD uses the ABG to partially fund its all-day kindergarten program.

In addition, the budget includes $225,000 in tuition reimbursements for students placed in approved private schools --- another source of state revenue initially thought to be reduced.

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