FCASD 2014-2015 Final Budget
The 2014-2015 Fox Chapel Area School District final budget calls for budgetary expenditures of $89,558,982. The increase in expenditures over the previous year’s final budget is projected at $3,175,247, or 3.6 percent. The final millage rate for 2014-2015 is 18.6283 mills. This is an increase of 0.98 percent over the prior year, or 0.1808 mills. One mill will equal approximately $3.4 million.
The School Board approved the 2014-2015 final budget at its special year-end meeting June 16, 2014. The public had the opportunity to learn more about the budget and make comments at a public information session that was held June 5. The session was called by the district administration and was not an official meeting of the Board of School Directors. The Board passed the 2013-2014 proposed final budget at its regular business meeting May 12.
The 2014-2015 final budget reflects the following:
— Salary line items are expected to increase 3.27 percent from last year’s budget. The district does not anticipate any reductions of overall professional staff.
— Premium rate costs for medical insurance will increase by 5.75 percent and are projected to increase total costs by 8.91 percent due to increased coverage of employee groups under the Patient Protection and Affordable Care Act.
— The school district’s contribution rate paid to the Public School Employees’ Retirement System (PSERS) will increase from 16.93 percent to 21.4 percent. The school district will be contributing $9,626,094 to PSERS in 2014-2015, compared to $7,419,461 in 2013-2014 – a 29.74 percent increase in cost to the district. The PSERS trustees determine the contribution rate increase annually.
— Student transportation costs are expected to increase by 4.42 percent due to contractual obligations with the existing bus companies.
— Tuition costs for charter schools are anticipated to rise by 5.8 percent.
The 2014-2015 final budget is endorsed by the district’s Resource Planning Committee, a group of residents with financial and management backgrounds that provide additional expertise to the School Board on financial matters.
PSERS and Future Challenges
The district will continue to face difficult budget years in the near future. It is estimated that under the current rate structure proposed for funding the state retirement system (PSERS), the district will pay out nearly $70 million over the next eight years. These unprecedented increases – combined with the limitations on increasing tax rates imposed under Act 1 – have necessitated the district to prepare for shortfalls in the budget.
The district currently has committed fund balance reserves of $12 million to cover the anticipated PSERS increases. The district will need to utilize $2.5 million of these funds in 2014-2015 to “bridge” the gap in funding for PSERS until the tax rates can keep pace and fund these costs. The district continues to reduce payroll costs through attrition and implement new instructional and administrative strategies to make the district more efficient and cost effective.
In addition, the district is preparing for future capital improvements and maintains a reserve to help fund these capital projects. The district issued bonds during 2013 and currently holds $46 million to fund renovations at the high school, middle school, and three elementary schools over the next few years. The bonds were structured so that no additional debt service expenditures would be required to fund these projects. The district will pay off all previously existing debt obligations by 2016. The Board and administration were able to achieve significant savings on the new bond issue as a result of historically low market interest rates.
By implementing sound financial strategies to manage expenditures and anticipate revenue shortfalls, the district’s future financial health continues to be stronger than many in the commonwealth. However, we continue to plan for future shortfalls through long-range budget forecasts.
Gaming Funds Distribution*
As of May 1, 2014, the Pennsylvania Department of Education informed the Fox Chapel Area School District of its share of gaming funds available for distribution. The final budget reflects a distribution of $1,466,101.97. The method of distributing these funds, as prescribed by Act 1, the Taxpayer Relief Act, will be via the implementation of the homestead exclusion. Under this provision, any property in the school district that was approved by Allegheny County as a homestead will have the lesser of its taxable value, or an estimated $9,900.99 of its taxable value, excluded for the purpose of calculating current school district real estate taxes for the 2014 tax year. The owners of the 7,949 properties in the district that qualified for the homestead exclusion will receive the equivalent of a $184.44 reduction in their property taxes. Property owners who currently do not have an approved homestead exclusion will have the opportunity to apply again when the district sends out letters to those homeowners in December 2014.
*Allegheny County has certified that there are 7,949 properties in the Fox Chapel Area School District that qualify for the homestead exclusion. If that number is adjusted by the county to include more or less properties, it could affect the amount of the final reduction.