In York County, fund balances from excess tax and other revenue have grown yet again for most York County school districts.

In the 2009-10 school year, the average York County school district had about $7.8 million of surplus money on hand.

That's according to year-end financial records obtained by The York Dispatch. The records are submitted to the state by each school district.

By comparison, when Act 1 was implemented in 2006 to put a limit on tax increases, the average surplus in the county was about $5.4 million.

The 2009-10 data show:

---Four districts had a surplus of more than $10 million, including Dallastown, Spring Grove, West York and York City.

---Half of the 16 county districts ended that year with an undesignated surplus at or above 8 percent of their year-end expenses.

The state limits school districts from keeping more than 8 percent in an undesignated fund -- the part not saved for any specific future use -- but that restriction is only in place at the time the budget is submitted. During the year, districts can move funds around.

West York had a $14.9 million fund balance by year's end. That amounts to 35 percent of its expenses. The district has a self-insurance policy that requires it to keep more money on hand, according to district officials.

Northern York had $7.2 million in its surplus, about 21 percent of its $33.4 million budget.

---Eight districts increased their fund balance and then raised taxes at or above the state limit for the ensuing 2010-11 school year. For example, Dover's surplus rose by $3 million to $7.2 million, and then the district raised taxes to the state limit of 3.9 percent.

Higher taxes, larger savings: It is that last point that seems to rankle taxpayers and teacher unions the most, based on comments at school board meetings. Why raise taxes or ask for wage freezes when there are millions of dollars sitting aside in an account that grows each year?

Beth Roberts, a co-founder of the 912 Patriots, said taxpayers need to do a better job making themselves aware of how much money their district sets aside, as well as other budget issues.

"People live under rocks," she said of public awareness.

The 912 Patriots are hoping to get members elected to school boards on a platform of fiscal responsibility.

C.J. Elder, a legal representative for the Dallastown teachers'

union, said teachers refused a wage freeze recently requested by the superintendent in part because they thought the district had too much money on hand.

"They really don't need that much of a fund balance to maintain the excellent credit rating they have," Elder said.

Dallastown Area School District business manager Donna Devlin said the district would lose money if it significantly spent down its fund balance to lower taxes.

And financial advisers repeatedly laud Dallastown's $14 million-plus surplus at school board meetings, saying it gives the district the best possible credit rating.

A better credit rating means a better interest rate, and that means money saved on loan payments. In Dallastown, that's extremely important because the district has more than $90 million in debt.

Superintendent Stewart Weinberg said Dallastown has been able to add to its surplus for several years because revenues have outpaced estimates.

And he dismisses the idea many taxpayers have raised at his school board meetings of using a huge surplus amount to keep taxes low.

"If (a district) is using $4 or $5 million this year, where are they going to find it next year?" Weinberg said.

The rationale is this: If you use $1 million to make up a budget gap this year instead of cutting expenses, the next year that $1 million won't be there to use, but there will still be a $1 million deficit.

Budget disparities: Once again, many school districts had disparities between the 2009-10 year-end fund balance numbers submitted to the state and the 2010-11 start of the year fund balance totals used in final budgets, based on the numbers submitted to the state.

Central York listed its 2009-10 year-end fund balance as $9.8 million, then said it had $8.4 million in its fund balance for the ensuing 2010-11 budget, according to documents submitted to the state.

Central had a similar disparity in last year's budget. Business manager Brent Kessler chalked it up at the time to an "anomaly," saying the district usually doesn't have huge differences. Central officials declined to comment for this story, saying they prefer the budget be discussed at upcoming board meetings.

Spring Grove ended with $10.1 million but listed $7.8 million as its starting surplus. Northern had a $2 million difference.

Best guesses: Business managers say the budgets are based on estimates, while the year-end numbers are based on hard figures, which accounts for some of the disparity.

Budgets have to be prepared months ahead of when final numbers are available, which can put districts in a bind.

For example, fund balances in the budgets school districts are debating now represent a best guess of how much surplus money the district will have on hand when their fiscal year ends on June 30 next year.

"We don't want to be overly aggressive in projecting an ending fund balance," said George Ioannidis, Spring Grove's business manager.

If the fund balance is projected too low, budget cuts that could have been avoided may occur. If the fund balance is projected too high, the cuts may not have been deep enough, he said.

Spring Grove will likely be using a chunk of its fund balance for the 2011-12 school year, he said.

The district has built up quite an amount, with more than $10 million by the end of the 2009-10 school year, one of the highest in the county. Like many districts, the surplus has steadily grown since Act 1 was implemented, even as the district has raised taxes year after year; Spring Grove raised taxes to the 3.7 percent state limit this school year.

How can a district raise taxes on one hand, and yet have enough left over to grow its surplus by millions?

"It's not as cut and dry as cut taxes and lower your fund balance," he said.

Ioannidis said several factors are in play:

---Many districts have been saving for what was expected to be a major pension funding crisis in two years; the crisis now seems to be lessened, although not greatly.

---Business managers are usually of the belief it's better to have incremental tax increases, rather than no increase for a few years and then a major hike. That means a tax hike -- and excess revenue -- could happen in a year when it might not be fully necessary.

---That leads to Act 1. With a cap each year on taxes, some business managers believe a district should consider raising what it can through tax revenue in that budget year, within reason, in case the cap is below expectations the following year.

"What you're doing is front-loading," Ioannidis said. "It gives you room to make budget cuts in less of a reactive way. You can ease your way into those cuts."

So districts try to build up a reserve, Ioannidis said, for years like 2011-12, when the cap is at its lowest level yet. If they had set lower taxes the previous years, they wouldn't have as much surplus to dig into, and would instead have to make deeper budget cuts.

Overtaxed?: Joel Sears, president of the York County Taxpayers Council, said he understands when districts want to set aside money for an upcoming capital project. But too many, he said, overtax and then have to rely on surplus later to make up for a lack of budget cuts.

"'We (districts) overtaxed in the past, and now we have all this pressure to balance the budget, so we'll look at the fund balance,'" Sears said of a school board's view. "'We pat ourselves on the back. Rather than raise your taxes, we balance the budget using the fund balance.' Where did that money come from folks?"

And then there's credit rating. Creditors use surplus as a major factor in figuring out what kind of interest rate a district gets on loans for building projects.

York Suburban, which had the lowest 2009-10 ending fund balance at $400,000, will likely have its credit rating negatively affected, said business manager Dennis Younkin. That could cost the district up to $100,000 during a construction bond, he said.

Other side of surplus: York Suburban, one of the wealthier districts in the county, has had a relatively low fund balance in recent years, and now might be paying for it.

Most districts like to keep a fund balance at or near the 8 percent limit they are allowed at the time they submit their budget.

Younkin said he's comfortable at 5 percent, but it's been below that in recent years because of above-average special-education costs and other factors.

Now there's no cushion, and the school board wants to stay within the 1.4 percent property tax cap next year. York Suburban is considering $400,000 worth of possible staffing cuts.

"That's part of the reason Suburban is in (this) position. We're making serious budget reductions," Younkin said.

-- Reach Andrew Shaw at 505-5431, ashaw@yorkdispatch.com or twitter.com/ydblogwork.