SOUTHERN LEHIGH INTERMEDIATE SCHOOL – District administrators and school board members reviewed the first draft of Southern Lehigh School District’s five year, 2011-2016 budget here Tuesday night.
Director of Business and Personnel Services James Snell highlighted major changes in the five-year budget in accordance with the committee’s previous guidance. In September, Committee Chairman Jeffrey Dimmig led the body to adopt parameters of $54,900,000 for the 2011-12 school year and $60,500,000 for 2014-2015. Dimmig said the district is “in spectacular shape” to meet the 2011-12 goal and in “pretty decent shape” through at least 2012-13. Beyond that point estimations are less exact due to factors outside of the district’s control.
Tax increases for the 2011-2016 period may be much lower than previously estimated, thanks in part to the diligent efforts of the administration to find ways to save money. Proposed savings come from many sources, such as not increasing the building budget in 2011-12, eliminating sabbatical funds, reducing software and technology purchases, and adjusting the thermostat by two degrees cooler in winter and two degrees warmer in summer. Committee members will continue to discuss these and many other possible cuts during the budget process.
Using Dimmig’s parameters, the proposed budget assumes that the school district will use most of its fund balance over the next five years to balance the budget. According to the proposal, the ending fund balance in 2009-10 was $18,321,835. Only $3,829,168 is estimated to remain by the 2015-16 school year. By contrast, higher tax increases would allow a projected $15,631,008 of existing funds by 2015-16.
Finance Manager Robert Guerriere pointed out that the school district earned over $1,000,000 in interest four years ago and over $800,000 as recently as the 2008-2009 school year. However, this year that number is estimated to drop to $150,000 due to low interest rates.
The state’s basic education subsidy came in slightly higher than expected this year, but will drop by $500,000 next year because of the end of federal stimulus money. Harrisburg has used money from the 2009 American Recovery and Reinvestment Act to “plug holes in the budget for the basic subsidy,” said Snell. According to Guerriere, superintendents around Pennsylvania fear that the state will not make up the difference, leaving school districts in the lurch beginning in 2011-12.
Snell also pointed out that the Public School Employees’ Retirement System contribution rate is projected to dramatically rise in the next five years. The rate was 4.76 in 2008-9, 4.78 in 2009-10, and 5.64 in 2010-11. Administrators predict that number will reach 24.24 by the 2015-16 school year. Dimmig and William Miracle agreed that PSERS could bankrupt 400 school districts in a matter of a few years.
Similarly, skyrocketing health care costs due to the national health care reform aka “Obamacare” will impact the school district. While the exact effects of the reform are hard to predict, Snell said the district is taking a “middle of the road approach” to estimating future health care costs. In 2008-9 health care costs held steady. In 2009-10 they increased by one percent. Administrators predict a 20 percent increase in 2010-11, a 10 percent increase in 2011-12, and a 12 percent increase in subsequent years. School Board Vice President Michael Eddinger said the school board has “got to get a better handle” on estimating future health care costs.
Superintendent Joseph Liberati said administrators are tracking approximately 23 potential retirements among school faculty. Dimmig said the five-year budget assumes two fewer positions in the 2010-11 school year and three fewer in 2011-12. School Board President Corinne Gunkle said “I think it’s important for people to see that these numbers are going down.”
Snell predicted future retirement costs will be “ungodly,” rising from $1,079,393 in 2009-10 and $1,284,547 this year to over $2,000,000 in 2011-12, $4,000,000 in 2013-14, and $6,000,000 by 2015-16. Snell said the estimates assume Harrisburg will continue to reimburse “affluent districts” like Southern Lehigh at a 50-50 rate throughout the five-year period.
According to administrators, charter schools cost the school district $400,000 four or five years ago. This year, the school district estimates it will pay $1,027,514 for charter school students and is estimating $1,654,822 in costs by 2015-16. Gunkle asked how much money the school district could bring back from charter schools. Snell predicted the administration could recoup $100,000.
Overall, if things continue to “break our way,” Snell predicted that the district could find $500,000, or around one percent of the total budget, in savings each year through 2016. Gunkle questioned the assumption, pointing out that savings will become harder to find after the first few rounds of budget cuts.
The next Budget and Finance Committee meeting will be held on Dec. 7 at 5:30 p.m. in the Southern Lehigh Intermediate School Staff Development Room.