While there are many wonderful things happening at GM that I would like to share with you, I feel I need to use this Lancer Letter to address the impact of the state budget cuts on our district.
First of all, let me say that I am learning in a comprehensive way, that budgeting is a complex beast. It all depends on where you put the numbers that allow you to say we giveth or we taketh away. One has to be very careful not to be misled by those who do not completely understand or by our own misunderstanding.
The first thing on people’s minds is usually taxation. Will it need to increase? To understand if and how much, I must first address the preliminary budget we adopted in February.
State law outlines an aggressive timeline for preliminary budget adoption. With a new governor, his budget was not due until March 8 but our preliminary budget had to be adopted in February. Once a preliminary budget is adopted, the district is restricted to tax increases adopted in that preliminary budget. Tax increases are set by an annual index (this year 1.9) and any increase above that index must go to a referendum vote. Exceptions can be granted to this referendum (“back-end referendum”) for costs not under the control of the district such as pensions and special education.
Because we knew Governor Corbett was going to slash education but we did not know how much, General McLane, and just about every other district, applied for the exceptions as insurance. (This was the first time we’ve ever done this.) The exceptions we were granted by the department of education, when combined with the index, would allow us to raise taxes by roughly 10%. That does not mean we will. A review of the history of tax increases by our board would indicate a strong reluctance to ever go this high. It’s just part of the timeline process that we have to be cautious and ask for “the kitchen sink” when we will only use a small appliance.
All good budgeting includes “worst case scenario” planning. Last spring the district did a five year projection. That type of projection involves guessing where increases and state funding will go, and determining what additional revenues would be required to meet those expenses. Over a five year period, the projection showed that a 25% increase in taxes would be required if taxes alone were to make up the shortfall. Again, that will not likely happen as many factors will play into the next five years.
So now that we understand the very tentative nature of a preliminary budget and five year projections, let’s talk about the shortfall we face. In the last two years, funding by the state to school districts increased and we were able to meet costs. Unfortunately, the state used 1.5 billion dollars in federal stimulus money to provide school subsidies and that money is now gone. Governor Corbett has returned the state to funding levels of 2008- 2009 which did not use stimulus money. While the education subsidy given to districts since 08-09 increased by 500 million, the state’s portion of that decreased by one billion. So while the state is reporting a 10% increase in their allocation of the basic education subsidy for 2011-2012, the amount being received by districts is substantially less. The 10% state increase makes up for a small fraction of the federal stimulus dollars.
In General McLane, we are receiving 1.5 million dollars less than in 2010-2011. When we factor in increasing costs in health care,pensions, utilities, fuel and salaries, we started by looking at a shortfall of 2.3 million. We have made cuts in just about every area that will not directly affect students of $878,183.00. We are still 1.5 million short.
We continue to look at ways to cut costs and will be working on it until a final budget is adopted in June. We welcome your questions and input as you can call, email or attend a board
The Lancer Letter is a weekly editorial by Richard Scaletta, Superintendent of Schools, General McLane School District.