Here's why state didn't release York City School District from financial recovery
York City School District's tax revenue has not met its expenses in recent years, and the district has relied on its reserves to buy down its tax rate, according to data from a recent report.
That’s one reason why the district could not get out of recovery when it applied for release this summer, said the district's state-appointed chief recovery officer, Carol Saylor, in a monthly report at the school board's Wednesday, Jan. 22, meeting.
"We in no way qualify because of the fact that our revenue is not equaling our expenditures," Saylor said.
The district has been on a state-mandated financial recovery plan since December 2012, when it was targeted as needing moderate academic and financial improvement, along with Harrisburg City School District.
Two other districts in the state — Chester-Upland and Duquesne City — were deemed severe and given a state receiver.
This is the second recovery plan for York City, in effect since March 2016. The first plan, initiated in 2013 under former recovery officer David Meckley, was scrapped when it eventually led to a proposal to largely turn the district into charter schools.
The new plan, developed with the help of Boston-based nonprofit education firm Mass Insight Education, focused on five areas and 23 strategies based on transforming the central office to better support schools in improving student achievement.
As part of the state's exit criteria, the district has to have two successive years with "positive annual financial results," meaning it did not use its fund balance to cover expenses.
York City used about $1.12 million of its fund balance by the end of the 2017-18 school year. It used an additional $2.6 million by the end of 2018-19, according to projections. It could use another $6.4 million by the end of 2019-20, Saylor reported.
Under the district's 2019-20 budget, which includes $156.4 million in appropriations, the district was projected to have a fund balance of about $5.6 million at the end of this year, or 3.6% of total spending.
Districts should maintain a minimum fund balance of 5% of total spending, according to state guidelines.
Saylor said federal money is limited in what it can be used for and state money is unpredictable, which leaves local revenue to cover the deficit.
But the district has a weak tax base, she said. Property values have not increased, but the district has no control over that. Superintendent Andrea Berry has also said that almost 30% of the district's tax base is exempt from paying property taxes.
"You all know that, you live here," Saylor said, addressing the board. "That's not news."
The district has the highest tax rate in the county, but officials have not raised taxes in at least six years, according to past budgets.
Real estate tax revenue has been between $26 million and $28 million since the 2014-15 school year, despite expenditures growing each year. In the 2019-20 school year, budgeted expenditures had reached $156.44 million — up more than $40 million since 2014-15.
The 2014-15 school year was also the last time revenue was equal to expenditures.
Former Superintendent Eric Holmes last year said the district had to keep the same level of spending to stay on track for its recovery plan, and that includes showing "significant progress" on its academic goals, Saylor said.
"Most of what you saw in Dr. Berry's 90-day plan relates to this," she said.
Berry presented a district plan with objectives through the 2020-21 school year based off her first 90 days as superintendent at the Wednesday meeting.
It can be found attached to the Jan. 22 agenda, which is available on the district's website, www.ycs.k12.pa.us.
As part of that plan, the district hired an assistant superintendent, LeTrecia Gloster, with experience turning around troubled schools, Berry said, and officials plan to set up a consortium with other county school districts to benefit from their experiences.
Goals centered around student achievement included more focus on data systems and accountability and keeping up with ever-evolving curriculum.
The main goal in terms of finances is to reduce the budget by 10%, as noted in the plan.
“We’re beginning to have those hard conversations,” Berry said.
Saylor said some of the district’s federal dollars might not have been supporting the five areas of the recovery plan, so that's something officials can reevaluate to get the best use of the money.
Other than limited property taxes, the other big strain on revenue is charter school tuition costs — which are expected to increase next year.
According to an early budget report, the district has 1,425 regular education students and 240 special education students enrolled in charter schools.
The regular tuition rates are projected to increase from about $11,173 to about $12,758 next year. The special education rates are projected to increase from about $26,791 to $30,608.
The 2013 recovery plan was structured toward avoiding that charter drain, but the district's current plan is more focused on academic achievement, Saylor said.
“I’m more passionate than ever to make sure our kids get the best and brightest education possible,” Berry said.