Octorara’s Financial Challenges for This and Next Year

Those who have been paying attention know that in June, the Octorara Area School Board passed a budget with full knowledge that spending was far outpacing revenue. This means the DIstrict must either take active measures this year, like not replacing retiring teachers, or make cuts in the upcoming 2018-2019 budget. The Finance Committee Meeting, held on September 18, has revealed some “new” (notice the quotes) issues that will compound the problem. So, let’s talk about some of that.

Pennsylvania’s Budgetary Woes

This is not news. The Commonwealth of Pennsylvania is having some serious budget and revenue issues. Octorora’s budget relies on receiving roughly $14 million from the state. However, as a consequence of the problems, around $10 million of that funding is at risk. The District has around $8 million in Reserve. So, there is a potential for the DIstrict to literally run out of money before the end of 2017-18, forcing the need for a short-term loan to keep things rolling.

How did this happen? When people hear the term Progressive, they think about left-wing types. Yet, many Republicans love to self-identify as Conservative, when they are really right-wing Progressives. What is the difference between left and right-wing Progressives? Not much. They both love large, bloated, and intrusive government. They both love to spend your money. The only difference is their priorities and the issues important to them. And, that is what we have in Harrisburg, despite the Republican legislature… a fat, bloated state government that loves to write checks they can’t pay for.

Funding Capital Expenditures

After years of other Board members claiming there is no problem and nothing to see here, the District has reached the point that funding for capital expenditures (such as facility repairs, security infrastructure, and so on) is reaching a critical mass and must be addressed. In documents provided to the  Finance Committee, the District has funds to cover capital expenditures for the current school year, and the 2018-19 school year, but that is it. After that, there are 2 choices. The first is that the approximately $400K to $600K in annual capital costs must come out of the General Budget, or the District can add to their debt, which could increase the General Budget by $200K, give or take, for the next 12-13 years.

Now, $200K does not seem like a whole lot of money in a $52 million budget. However, there are some things you must consider. First is the fact that our budget is growing faster than we can tax. So, even if you are someone who likes the idea of taxing up to the ACT 1 limit every year, it doesn’t matter. The second is years of subsidizing budgets with refinancing the debt. As those credits disappear, we need to find ways to replace that funding source or cut costs. So, there is just no money. We do have the $8 million in the General Reserve, so we can pretend there is no issue for a short time longer. But, we all know that using savings to pay your regular and ongoing bills is a recipe for disaster.

No one should be shocked here. The writing has been on the wall for a very long time, and this is the outcome of failing to consider the long-term consequences of spending and subsidizing budgets. Moreover, we have some people more interested in debating and protecting special interests than actually fixing problems. Winning a debate is not the same as winning the facts.

Althouse Transportation Is a Vendor

The notion that Althouse Transportation is not a vendor may seem bizarre to some people. However, the bussing company has for a long time received special treatment, with the power to negotiate contracts much like the teacher’s union. Other vendors do not receive this benefit. Typically, at the end of a contract, a vendor is told what the District can afford and expects and, if the vendor’s proposal does not meet the District’s needs, the District will seek pricing from other vendors.

At this week’s Finance Committee Meeting, Lisa Bowman asked the question (paraphrasing), Why does Althouse Transportation get this special benefit? No one could really answer this question. So, this year, there will be no negotiations and Althouse will be treated like any other vendor. This is a pleasant change. In the past, when I brought up getting bids for transportation there was a good bit of resistance, which seemed to be more about wanting to protect Althouse’s business than getting the best price for taxpayers. Nevertheless, since transportation is such a large portion of the budget, it was probably only a matter of time.