2018-2019 Proposed Final Budget
The 2018-2019 Fox Chapel Area School District proposed final budget calls for budgetary expenditures of $98,713,819. The increase in expenditures over the 2017-2018 budget is projected at $1,907,816 or two percent. The proposed final millage rate for 2018-2019 is 19.5750 mills. This will be an increase of 0.2321 mills, or a 1.2 percent increase in millage rate. The allowable increase under Act 1, the Taxpayer Relief Act, for 2018-2019 is 2.4 percent. It is estimated that this increase will generate an additional $808,000 to fund the district. One mill will equal approximately $3.4 million.
The School Board approved the 2018-2019 proposed final budget at its regular business meeting May 7, 2018. The Board will discuss the proposed final budget at its meetings June 4 (in the O’Hara Elementary School auditorium) and June 11 (in the high school large group instruction room). The Board is expected to pass the final 2018-2019 budget at its June 11 meeting and residents are invited to attend all Board meetings which begin at 7 p.m.
The 2018-2019 proposed final budget reflects the following:
— Salary line items are expected to decrease by 1.3 percent from last year’s final budget. This is due primarily to the beginning of the early retirement incentive that was offered to the Fox Chapel Educators Association. There are 10 teachers confirmed to retire effective July 1, 2018, and three are being replaced. One new elementary position is budgeted due to a potential enrollment increase at Hartwood Elementary. Please note, there are 54 teachers who have accepted the early retirement incentive and will retire over the next two years. Not all of the 54 teachers are scheduled to be replaced. Positions that will be filled will bring a savings to the district due to the lower salary of a newer teacher. Despite this reduction in staff, the district will make every effort to ensure that students continue to receive the highest quality education.
— Premium rate costs for medical insurance will increase by 1.9 percent. There are no premium rate increases for dental or vision insurance for 2018-2019. Overall costs for medical, dental, and vision insurance are projected to decrease by 2.5 percent compared to the 2017-2018 budget.
— The school district’s contribution rate paid to the Public School Employees’ Retirement System (PSERS) will increase from 32.57 percent to 33.43 percent. The school district will be contributing $15,281,092 to PSERS in 2018-2019, compared to $14,762,367 in 2017-2018 – a 3.5 percent increase in cost to the district. The PSERS trustees determine the contribution rate increase annually.
— The first scheduled repayment of the district’s 2017 general obligation bond will occur in the 2018-2019 school year.
— New computer equipment purchases for the district will cost $654,351 which keeps pace with the current plan to replace aging laptops for staff and students in all buildings.
— The district budgeted $655,000 in costs related to technology, security cameras, and playground equipment for the new Kerr Elementary School.*
The 2018-2019 proposed 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 Major Budgetary Matters
All school districts continue to face budget constraints. It is estimated that under the current rate structure proposed for funding the state retirement system (PSERS), Fox Chapel Area will pay out nearly $55 million over the next five years. These 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 $9.5 million to cover the anticipated PSERS increases. The district utilized $500,000 of these funds in 2017-2018 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 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 maintains funds reserved for capital projects. The district had issued bonds during 2017 for capital improvement projects at Dorseyville Middle School and the Fairview, Kerr, and O’Hara elementary buildings. The district was able to issue those bonds at a savings due to lower market interest rates. In 2018-2019, the district will be drawing down $655,000 from the capital projects’ assigned fund balance to cover a portion of the costs (see * above) associated with the new Kerr Elementary building construction.
By implementing sound financial strategies to manage expenditures and anticipate possible revenue shortfalls, the district’s future financial health continues to be stronger than many in the commonwealth.
Gaming Funds Distribution**
On May 2, 2018, 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 proposed final budget includes a distribution of $1,476,655. 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 $9,655.61 of its taxable value, excluded for the purpose of calculating current school district real estate taxes for the 2018 tax year. The owners of the 7,827 properties in the district that qualified for the homestead exclusion will receive the equivalent of a $188.66 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 2018.
**Allegheny County has certified that there are 7,827 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.