BREAKING NEWS: New Push For PA School Property Tax Elimination Expected

New Push For PA School Property Tax Elimination Expected

The Octorara Area Board of Directors and Finance Committee met on Monday, January 16, 2017. Eight Board members were in attendance. Anthony Falgiatore was absent.

2017-2018 Budget Update

While the overall agenda was limited, the Finance Committee and Board did receive an update on the 2017-2018 Budget. Some of the presentation was a formalized reporting of what we have already been told. However, there was some new data and projections.

  • Early State Funding Estimates – Our developing budget does not include increases in State spending for Basic Ed, Special Ed , or Ready to Learn. This is because Pennsylvania is suffering from a revenue shortfall of $260 Million, which is expected to grow to $600 Million. There are rumors that some in the General Assembly are working to add $100 Million to Basic Education, but, for now, it is just that… rumors.
  • Anticipated Use of Fund Balance –  In December, the originally reported Anticipated Use of Fund Balance was $577.285. After the actual Debt Service refinancing, this number has increased to $652,775.
  • Taxing to the Act 1 Limit – The current deficit of $1.2 Million and an Anticipated Use of Fund Balance of $652,775 are based on a 3.2% Property Tax increase.

The Blue & The Yellow

The Finance Committee has requested an update of the infamous Blue & Yellow List, which we will loosely describe as a list of potential cuts. Last year’s list included such things as:

  • Eliminating In-School Suspension (ISS) at OAHS
  • Reduce One Instructional Assistant at Secondary Level
  • Not Replacing a Spanish Teacher
  • Not Replacing or Reducing a Special Education Teacher
  • Do Not Replace a K-4 Retiring Teacher

However, it also included more radical potential budget reductions, such as:

  • Eliminate All Instructional Technology
  • Eliminate Bussing, and
  • Eliminate Kindergarten Altogether

As we know, what the Board eventually settled on included the elimination of several teaching positions and the K-6 Librarian. This year, we can expect a similar list that includes ideas revolving around reducing supplies to cutting teaching positions to eliminating transportation. Why is the list so broad, from the mundane to the extreme?

I can only presume it is so the Administration can avoid making anything close to an actual recommendation. Last year, I did ask Dr. Newcome point blank, “If you had to make the choice, would you cut a teaching position or the armed security guard?” His answer was that he would cut security. However, as we know, that is not the direction the Board went.

As of this moment, there is not even a consensus that we need budget cuts this year. Some ideas being batted around include (1) doing nothing, which means leaving the draft budget roughly as is, (2) taxing less than the Act 1 Index but not cutting expenses, which will grow the deficit and use of fund balance, and (3) evaluating the Blue & Yellow List, but not working with any specific goal. I did suggest going into this with a target tax rate, expenses, and use of fund balance in mind, but no one seemed to like the idea of actually having a plan.

Career & Technical Costs

Granted, this is going to be a bit controversial. I would ask that you keep an open mind and read through all of this before passing judgment. I have repeatedly suggested that cuts should first come from the new or expanded programs from the last 15 years. Octorara’s Career & Technical programs are on that list. One of the prime motivations of these programs, just like full-day Kindergarten, came from a desire to save the District from paying tuition, not actually enhancing education.

At the Finance Committee, we discussed the services from the Chester County Intermediate Unit. Overall, the CCIU saves the District a considerable amount of money on everything from supplies to equipment rentals to professional services. However, generally speaking, our Board hates paying tuition to other entities, whether it is a charter school or the CCIU’s Technical College High School (what people my age would call VoTech).

Much like with charter schools and full-day Kindergarten, the Board believed they could keep students at Octorara, and save money, if they provided their own Career & Technical programs. Well, we received some interesting information about this last night. It turns out that historically between 80 and 100 (give or take) students attend CCIU’s Technical College High School every year. This number range has not changed as result of Octorara offering their own Career & Technical programs. What has happened is more students participating, more than 250 students in total.

So, just as with full-day Kindergarten, the outcome was not what was expected. Of course, there is value in having more students participating. However, the issue still comes down to basic economics and spending more than we can afford. We are a small, rural school district with limited resources, struggling to provide just basic education, that wants to be perceived as one of the big dogs… and we see this in many of the spending choices over the last 15 years.

We all probably know that guy who always seems to have money for designer labels and expensive cars, but is living paycheck to paycheck, barely able to make his mortgage payment, Well, that is Octorara. We are happy to walk around with a gold watch on our wrist and holey socks on our feet. It is all image over substance.

Property Tax Elimination

The last time Pennsylvania’s General Assembly tried to eliminate school property taxes, it lost in the Senate by just one vote. Nonetheless, it is back on track this year. I have been a strong supporter of this effort for years. While philosophically and ideologically State funding of public K-12 education gives me heartburn, as a practical matter, local school boards just have too much power to tax people out of their homes.

Regardless, for the first time, property tax elimination has become legitimately part of our budget discussions. In Harrisburg, there is a renewed push to reform how school districts are funded, and Octorara’s Administration is taking it seriously. While there is no bill currently, the past incarnation replaced property taxes with an increase in income and sales taxes. Moreover, districts would essentially be placed on an allowance and would have to create budgets within those limited.

That said, the bill did not eliminate property taxes altogether. Districts would still be able to collect taxes for existing debt. For Octroara, this is 19 percent of the existing burden, or a change from 38.63 mills to roughly 7.34 mills. Additionally, a school district could not take on new debt without a referendum from the voters. This means the next time the Board gets the bright idea to build a new school, they need to convince voters it is actually needed. Overall, property tax elimination will fundamentally change the way we do business.

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4 thoughts on “BREAKING NEWS: New Push For PA School Property Tax Elimination Expected

  1. Re. push in the General Assembly to change how school districts are funded:

    1. I didn’t know there had been a previous effort to do this, and that the effort failed by only one vote in State Senate. Maybe the second time will be the charm.

    2. But it’s not even a bill yet, just a gleam in the eyes of some practical-minded politicians. (Gee, I wonder what party most of them belong to?) I’ll believe it when I see it.

    3. While I share your concerns about the state becoming even more firmly entrenched in our schools, a trade-off between increases in state income taxes and sales taxes on the one hand, in return for the elimination of school property taxes sounds like it has great merit, at least in theory. There are things individuals can do to control how much they pay in income and sales taxes, but effectively nothing they can do, aside from moving, when a fiscally imprudent school board of directors won’t wake up and smell the coffee, but rather just wants to try to keep living a Starbucks lifestyle.

    4. And you say that under the proposal it’s likely that “…a school district could not take on new debt without a referendum from the voters.” Wow, what a concept! POWER TO THE PEOPLE!!

    • I think this is actually the 3rd attempt since I have been on the Board. The first time, the bill did not make it out of committee. The second time, it failed because a few Senators flipped. This time, we expect to see something by February, and the chatter is that it is a high priority to get pushed through for the 2017-2018 school year budget.

      • I will have to put a call in to rep. John Lawrence this is great news.Mike Stack Lt. gov. was the one vote that stopped it last time.Stopping the board from BRIGHT IDEAS is priceless.

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