2017-2018 Final Budget
The 2017-2018 Fox Chapel Area School District final budget calls for budgetary expenditures of $97,300,359. The increase in expenditures over the previous year’s final budget is projected at $1,917,356 or two percent. The final millage rate for 2017-2018 is 19.3429 mills. This will be an increase of 0.3607 mills, or a 1.9 percent increase in the millage rate. The allowable increase under Act 1, the Taxpayer Relief Act, for 2017-2018 is 2.5 percent. It is estimated that this increase will generate an additional $1.1 million to fund the district. One mill will equal approximately $3.4 million.
The School Board approved the 2017-2018 proposed final budget at its regular business meeting May 8, 2017. The Board passed a final 2017-2018 budget at its regular business meeting on June 12.
The 2017-2018 final budget reflects the following:
— The overall budget by line item shows a decrease in expected expenditures, however, that is skewed by the increase in salary and benefits. Salary line items are expected to increase 3.6 percent from last year’s budget. This is because there is no reduction of professional staff anticipated. The prior year had retirements factored into the budget projection.
— Premium rate costs for medical, dental, and vision insurance will each increase by 1.9 percent, and overall coverage costs are projected to increase by 4.2 percent. This is the first year that dental and vision rates have increased since the 2009-2010 and 2010-2011 school years, respectively.
— The school district’s contribution rate paid to the Public School Employees’ Retirement System (PSERS) will increase from 30.03 percent to 32.57 percent. The school district will be contributing $14,762,367 to PSERS in 2017-2018, compared to $13,486,962 in 2016-2017 – a 9.46 percent increase in cost to the district. The PSERS trustees determine the contribution rate increase annually. A total of $2 million was drawn down from the district’s PSERS-committed fund balance in 2016-2017, and an additional $500,000 is planned to be drawn down in the 2017-2018 school year to cover these increased costs.
— New textbook adoptions in both English Language Arts and science are planned for 2017-2018 which results in approximately an additional $900,000 in one-time costs.
— Tuition for charter schools and other outside agencies continue to rise. The estimated increase for these expenditures is $173,604 or 7.9 percent.
The 2017-2018 final budget is endorsed by the district’s Resource Planning Committee, a group of residents with financial and management backgrounds that provides 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 $61 million over the next five 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 $10 million to cover the anticipated PSERS increases. The district utilized $2 million of these funds in 2016-2017 to “bridge” the gap in funding for PSERS and will continue to use committed fund balance reserves until the tax rates can keep pace and fund these costs. The district plans to utilize $500,000 from this same fund in 2017-2018 and each subsequent year to continue to “bridge” the gap. The district continues to reduce payroll costs through attrition and by implementing 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 will have fully utilized those funds by the end of the 2016-2017 school year for the renovations at the high school, as well as to pay for a portion of the renovations at the middle school. The district also issued bonds in May 2017 for capital improvement projects in process and in the planning stages at Dorseyville Middle School and for the O’Hara, Fairview, and Kerr elementary buildings. The district has now closed on the bonds and received the anticipated savings due to the 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, the district continues to plan for future shortfalls through long-range budget forecasts.
Gaming Funds Distribution*
On May 2, 2017, the Pennsylvania Department of Education provided the Fox Chapel Area School District with the amount of the district’s share of gaming funds available for distribution. The final budget includes a distribution of $1,480,832. 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 $9,787 of its taxable value, excluded for the purpose of calculating current school district real estate taxes for the 2017 tax year. The owners of the 7,837 properties in the district that qualified for the homestead exclusion will receive the equivalent of a $188.95 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 2017.
*Allegheny County has certified that there are 7,837 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.