Central York board struggles with $2M-plus budget deficit
Central York School District is anticipating a more than $2 million deficit for next school year, and some board members say that gap needs to be addressed before they'll agree to any new funding.
The board could approve the maximum tax increases allowed by the state for the next few years and use its general fund balance to avoid cutting any programs, but the board members warned that the district can't continue to operate this way.
At the board's monthly action meeting Monday, April 30, the discussion was focused on when suggestions for curbing the budget would turn to decisions.
Preliminary budget: The board approved a preliminary budget in December, which showed a deficit of $3.39 million, but the deficit was reduced to $2.16 million after an April 11 budget workshop.
From the 2017-18 school year to the projected 2018-19 school year, local, state and federal revenue increased, but so did expenses, according to an online review of the budget.
The review shows the district has had a projected deficit of more than $2 million in its preliminary budgets for the past six years.
Last year's deficit — which was reduced to $1.15 million — was covered with pension reserves.
Options for the 2018-19 budget are to raise taxes, cut more expenses or cover the deficit with the district's projected $5.13 million general fund balance or reserves.
The state allows the board to raise the district's current millage rate of 19.35 by 3 percent without a voter referendum or an exception through the state Department of Education or Court of Common Pleas.
If members choose to increase the rate to 19.93 mills in 2018-19, the average homeowner — with a home value of $165,633 — will see an increase of $96.07 on their tax bills and revenue for the district would increase by $1.66 million, according to the preliminary budget.
No extra funding: When the board made a motion to add $11,661 of funding for high school water polo to the athletic budget, board member Karl Peckmann said it was hypocritical considering the board had proposed budget cuts.
The board voted to table the issue until its May meeting.
For each additional agenda item that involved approving programs with possible added costs, Peckmann chimed in with similar statements.
Jane Johnson, who voted in favor of tabling the issue, agreed with the idea of not increasing funding before discussing budget cuts.
"I don't understand when we do that," she said. "When do we say we're willing to give something up?"
Board member Veronica Gemma suggested a workshop or executive session to look at finding cuts.
Joseph Gothie was in favor of a meeting but said his fellow board members did not seem to have an appetite for making unpopular cuts.
With spending increasing 5 percent or more each year, he said, it's outpacing the 1 percent to 2 percent increases in revenue, and relying on a maximum tax hike each year and a general fund bailout is not sustainable.
"I just can't in good conscience spend any more money," Johnson said, adding that she's willing to take the time to figure out what to cut — it's what she signed up for as a board member.
She said though they might not need to go line by line to make specific cuts, the board was given a proposed budget cut list, and she wonders when members plan to make a decision on it.
Debt-free in 2023: Board Secretary Brent Kessler said according to budget projections, if the district maintains maximum tax rates and continues to deplete its general fund balance each year, it will be debt-free by the 2023-24 school year.
The general fund balance will be gone, he said, but the district will be able to start building it up again that year. The projections are based on assumptions of costs such as salaries, pensions and health care, which could be subject to change.
"I wouldn't teach my children to take care of their funds like this," Johnson responded, noting the maximum tax rate increase each year. And Kessler added that the projections were a model, not a recommendation.
Board President Eric Wolfgang said the district hasn't added many new programs, has had modest salary increases, increased its revenue to offset costs and up until this point, has not had to increase taxes to the maximum limit.
"I don't know that there's any appetite for most of the community ... to begin cutting and gutting programs," he said.
Wolfgang recalled the district was also broke four to five years ago, and it has managed changes as responsibly as possible without making a lot of cuts — and in spending down reserves that were built up for that purpose.
Capital needs: But Johnson said while using the fund balance now might be OK, it might be needed within the next few years for expenses such as capital improvements, which were deferred earlier in the year because there was no room in the budget.
The current capital reserve balance sits at $2 million, according to the budget review.
Gothie agreed, saying the district can't endlessly cut capital improvements.
"We've got a million square feet of specialized commercial space that's not getting any younger, we've got a gym that's leaking over at Sinking Springs ... there's all kinds of issues that are not getting any less bad," he said.
"Nobody really wants to make any hard choices here," he added. "We either do that, or we can keep milking the taxpayers, and I'm not for that."
Central York will have four more board meetings — two in May and two in June — before the final budget is adopted June 18.