'As you may guess, things have changed': York school districts grapple with uncertain budgets

The coronavirus pandemic could hammer York County school districts, some of which were already facing deficits going into 2020-21 before the global health emergency.

The outbreak has thrown another unknown in revenue projections, as local taxes and revenue streams are projected to take a dive for several years after the dust settles.

York Suburban is facing a deficit of about $3.35 million next year, and without a tax increase the district would deplete its fund balance by the beginning of the 2022-23 school year.

A tax increase of any size would just delay the depletion by a few years — and that's assuming no hits to local revenue, said business manager Kathy Ciaciulli.

“This is a very serious situation, and it’s hit me right between the eyes,” said board President John Posenau at an April budget meeting.

John Posenau, Board President
York Suburban School Board, Monday, Dec. 4, 2017. John A. Pavoncello photo

Some officials said they are pushing back schedules to pass preliminary budgets based on unclear guidance from the Pennsylvania Department of Education or federal government.

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A federal stimulus package of $13.5 billion is earmarked for public school budgets, but no district knows what its share will be yet or when that money will come through.

Northern York County business manager Jason Young said in an email that he doesn't expect it will reduce expenditures significantly.

"We continue to receive unclear guidance from PDE and there isn’t a lot of clarity out of the Act 13," Red Lion Area business manager Tonja Wheeler said of the state's emergency school code bill.

Not knowing which vendors are required to be paid and which reimbursements to expect next year makes it difficult to plan a budget, she said.

South Western's preliminary budget was adopted March 11 — "which seems like an eon ago" — said business manager Jeffrey Mummert.

"As you may guess, things have changed," he said. "This is not the same world we were in a month ago."

The effects of the pandemic will not be seen immediately, so many districts are not predicting significant changes to revenue or expenditures this year.

But it's crucial to plan for what lies ahead, officials said.

“The effects of what’s going on right now are far-reaching,” Wheeler said, and will be seen over the next two to four years.

The Pennsylvania Emergency Management Association surveyed districts on unexpected expenses through March 25 and is planning to allocate emergency funding accordingly.

The biggest hits will be to local revenue — property taxes and earned income taxes that are taking a dive from growing unemployment and fewer transfer taxes from dwindling home sales.

"We are reworking our budget completely in light of the changes that are occurring," said Susan Green, chief financial and operations officer for Southern York County School District.

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Green said her district's interest earnings will decrease between $300,000 and $400,000.

Cash flow could be a problem if state subsidies are delayed, but since local revenue funds about 75% to 85% of the budget, it won't be a problem this summer, said Central York business manager Brent Kessler.

Central York High School, Tuesday, April 14, 2020.
John A. Pavoncello photo

However, the district could run into revenue shortages by next year and might have to consider options such as taking out a line of credit or restructuring debt payments, he said.

Southern and Northeastern — the latter of which projects a $1.8 million revenue loss — are actually considering a property tax freeze for 2020-21.

"We just feel strongly that our community isn’t able to bear an increase right now," Green said.

To help prepare, some districts are using the Great Recession of 2008 as a benchmark for what’s to come.

Historically, tax collection rates have not fallen too much — about 2% after the Great Recession, according to records from Central and York Suburban.

Kessler expects a federal stimulus of more than $500,000 based on what his district received in the 2009-10 and 2010-11 school years.

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But there are some notable differences from a regular recession that could factor in, such as commercial retailers not paying landlords, said Central board member Joseph Gothie. 

Fortunately, districts have not reported too many costs for the transition to online learning so far, as many are up-to-date on technology.

But several parents and students dialed into a Central York board meeting Tuesday to express their concerns over students’ inability to complete work on iPads described as aging and in desperate need of an upgrade.

The district is considering approval of a $1 million technology budget to support leases for 1,800 new devices along with other costs — about $25,000 more than last year's budget.

But with money tight, districts need to think twice before approving new spending, said board member Jodi Grothe.

"People are applying for unemployment and we're sitting here acting like we're just buying something at Amazon," she said.

Districts have seen savings in some areas, however, such as utilities and transportation costs while schools are closed. Central will save about $1 million in transportation, minus $300,000 next year that the district won’t get from state reimbursements.

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To help reduce its future cost burden, York Suburban is closing its 2019-20 budget effective April 20 so the ending surplus can be added to next year's budget. 

Board Treasurer Joel Sears recommended a 2% tax increase and hiring freeze as parameters for the district's preliminary budget, which would also be up for board consideration April 20.

Though using the district's fund balance to cover costs is not a permanent solution, York Suburban Superintendent Timothy Williams said that in this case it might be necessary.

“In my mind, reserves are rainy day funds — and it’s pouring," he said.