Lancer Letter – 2017-2018 Budget

Submitted by Richard Scaletta, GM School District

As is my custom this time of year, this week I will be sharing information about next year’s budget. This year, I have good news and bad news. Usually, I just have bad news so this year is an improvement.

The good news is that for the first time since I’ve been superintendent, we do not need a tax increase to balance the budget. (Insert loud cheers and comments of amazement.) The reason for this is not that anything has become cheaper, but it is because we made the last payment this year on our debt service and have no payments to make in future years. This is similar to paying off your mortgage.

So instead of paying our mortgage, that money is going to cover the increases for personnel, pension, charter schools, health care and operating costs. But even with this sudden availability of cash, our budget only projects a balance of $13,000 to the good at the end of 17-18.

In next year’s budget, we find it necessary to add some staff, something we haven’t done in a very long time. (We’ve actually been cutting staff over the last 20 years.) The population at McKean Elementary is such that we need to add one or possibly two classroom teachers, depending on kindergarten enrollment. We also need to add an Emotional Support classroom (teacher and aids) at Edinboro Elementary. We have an emotional support program at McKean and have been sending children from Edinboro who need this service to McKean but unfortunately, the number of children with emotional needs is rising significantly. This number is expected to grow and may result in the need for more support and expenditure in the future at the secondary level.

Another large budget allocation for next year is for health care. Since Obamacare is still going to be with us, that means a significant amount ($665,000) has to be budgeted to either additionally insure more people or pay a penalty. This is a murky issue but we have to be prepared.

So, here is where the bad news comes in: don’t get used to no tax increase because our state appropriation is dropping significantly. Let me explain why.

In Lancer Letter #285, I showed how our local tax increases over the past five years went completely to cover the increases in pension payments and charter school tuition. That left us with our increase in basic funding from the state to cover increased costs of personnel and operations. Our increase in state funds usually came in around $250,000 to $350,000 dollars per year. Now with the new fair funding formula being implemented, our increase for this school year (16-17) was only $148,000 and for next year (17-18) will only be $73,000. That number is likely to trend downward.

You are likely hearing a great deal about fair funding as it has become a rallying cry for Erie. But a fair funding formula was implemented last year and applied to this year’s budget and is the reason we are receiving fewer dollars from the state. In Lancer Letter #300 (you can access all Lancer Letters on our website under Central Office-Superintendent) I give more detail than you probably want on how the fair funding formula works and the history behind it. Recognizing that over time, the state’s lack of any type of funding formula and political method of distributing money has been unfair and has shorted high-need districts, the formula is designed over time to push more money toward the needier districts.

The new fair funding formula only guarantees that a district will not receive any less money than it did in 2014-2015. This is referred to as “hold harmless.” Only the increased appropriations since 14-15 are applied to the new formula for distribution. Erie would like the state to use the new formula on ALL the funds the state allocates toward education, not just the amount increased since 14-15. This would solve Erie’s problem and the dire financial situation of 20% of the districts in the state, but would plunge us and the other 80% of districts into insolvency. That is why the formula is being applied slowly over time. The bottom line for us is that we will be on our own for increased funding. We won’t be able to rely on the state to help with increased costs and will have to rely on tax increases.

It is known as part of the work done to create the fair funding formula that adequacy is also part of the equation. To make everything truly fair for all, the state would need to allocate 4.3 billion additional dollars per year to education. We can’t totally blame our coming scarcity on just the formula but with a firm resolve not to raise any taxes, they will never have the money to get us to adequacy and true fairness.

So, enjoy this year with no tax increase but be prepared going forward as the fair funding formula tightens our financial noose.

The Lancer Letter is a weekly editorial by Richard Scaletta, Superintendent of Schools, General McLane School District. Opinions expressed are Mr. Scaletta’s views on the issues and subjects of discussion, and not necessarily those of or our sponsors.

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