Proposed St. Marys School District Budget Shows Tax Increase

April 12, 2010

A 1-mill property tax increase is being proposed in the St. Marys Area School District budget, which is needed to offset the increase in the contribution rates the district will have to make to retirement funds in the next four years.

During Thursday’s St. Marys Area School Board workshop, Superintendent Anna Kearney said she and Business Manager Cindy Fingado put together a financially sound budget for the 2010-11 school year.

Currently, a property owner with a $50,000 home is paying $736.25 a year for school real estate taxes. A 1-mill increase would raise that by $25. Residents also pay taxes to the municipality they live and the county.

The board did not raise taxes this year due to the local economy, but it must look at what will occur in the next four years, Kearney said.

The threat of revenue sources ending and the looming increase in the district’s contribution to the retirement plan are included in that picture.

The Community Development Block Grant that used to fund the all-day kindergarten program is being redirected this year. Title I and Title IIA programs are also set to be changed. The money will become a competitive award and go toward districts that are most in need of improvements. The money from those programs is used for reading specialties and elementary tutors. It also helps the district to keep class size low.

Beginning in 2011, the Title IIA money may go away.

The district anticipates receiving $6,462,866 in its basic subsidy from the state. Smethport gets more than the St. Marys Area School District and Bradford receives twice what St. Marys does for its basic subsidy, Kearney said.

The subsidy is based on a number of factors such as pov erty rate, the market value of homes and the average incomes for families.

Between last year and this year, there was less than a quarter of a percent increase in expenditures because of the work in the district to cut back to the bare essentials, Kearney said. No programs were cut

The district will be facing an 8.22 percent increase in its contribution to the retirement plan. In 2009-10, it paid $543,808; in 2010-11, it will pay $912,818. In 2013-14, its contribution will jump to $3,908,955. This is a cost the district has no control over. The percentage the district must pay is based on the increase in salaries.

The district has not planned for any major expenditures in its four-year plan because of the significant increase in the district’s required contribution for retirement, she sad.

If the district doesn’t raise taxes in the next four years, it will be $1,931,219 in the red by the year 2013-14. If the district increases taxes by one mill a year for the next four years, it will still be $79,219 under where it needs to be in 2013-14.

Act 1 will only allow taxes to be raised 1.13 mills this year. Legislators are discussing extending the retirement contribution requirement over the next five to seven years.
"It’s not something that is going to go away," Kearney said. "The projected budget looks good. This is a frugal district that spends wisely," Kearney said.

A 2 percent growth in industry is expected now that industries are beginning to call people back and hopefully it will continue to grow, she said.

The district will receive $533,342 less in revenue for 2010-11 because the stimulus money will be gone. A slight decrease in special education funding is also expected.
If the costing out study figures are followed is also unknown. Under the study, it was recommended that the St. Marys school district receive an increase in its subsidy, but now that Interstate 80 tolling has been rejected by the federal government, Kearney said she didn’t know if the state would provide the additional money the study calls for.

The district is making repairs to its buildings despite the tight budget.

This past winter there was a serious problem with the middle school heating system and the middle section of the school had to be closed down. Rather than wait until the district is in a situation where it has to close the entire building down until the Department of Education allows it to be fixed, the district needs to take care of the problem.

The budget allows for some capital improvements, so money from that will be used, as will money saved from seven teaching positions that were absorbed, the elimination of a guidance counselor for alternative education and one-and-a-half secretarial positions.

Other work that needs to be done is a new roof and heating units on the middle school and a partial roof replacement at Fox Township.

Much of the budget can’t be adjusted. Forty-seven percent of the budget goes for salaries, which are contracted; 18 percent goes for benefits; and another nine-percent goes for other contracts such as Aramark. Sixteen-percent of the budget is used for field trips, athletics, supplies, textbooks, etc.

"If you don’t want to have a mill increase we will have a huge gap in four years," Kearney said.