As a result of Act 72,
the Baldwin-Whitehall School District encountered significant
changes to its budgeting process for the 2006-2007 fiscal year.
Compliance with this law, coupled with the challenges of the
high school construction project, the financial strain of additional
indebtedness, and the changes in the District wide demographics
necessitated an increase in the real estate tax rate of 1.5
mills, effective July 1, 2006. To better understand the budget
process, assumptions, and the source and use of funds, the following
sections will highlight major issues or initiatives which concluded
with an operating budget of $54,942,500.
The Pennsylvania legislature
signed Act 72 in law in 2004, as a companion to Act 71 related
to legalizing gambling. The Board of School Directors opted
into the program in May 2005, which required the District to
increase the Earned Income Tax (EIT) by 0.1%, and this increase
along with gaming revenue would generate a rebate for homeowners
through the use of homestead exclusions. The District would
not receive any additional funds for school programs. The Act
required acceleration in the budget process, as outlined below,
resulting in numerous budget revisions from December 2005 to
June 2006.
Provisions in the Act
allowed Districts to increase their real estate tax rate up
to an index, which for
BWSD amounted to 1.1 mills, as well as apply to the Department
of Education for additional increases based on "Exceptions"
allowed under the law. The necessary increase in millage of
1.5 mills included 0.4 mills of exceptions for maintenance of
revenue, school construction costs and increased retirement
contributions.
With less than one-fourth
of the school districts in the Commonwealth having opted into
Act 72, the uncertainty of the timing of gaming revenue, and
political pressure for tax reform, the legislature passed the
Taxpayer Relief Act, Act 1 of Special Session 2006 in June 2006.
Under Act 1, BWSD will appoint a Local Tax Study Commission,
comprised of District residents, by September 14th to research
"… the existing taxes levied…determine how
the tax policies of the school district could be improved by
the levy of …[the increased EIT or a PIT which, together
with gaming revenue, would effect a reduction in real property
taxes]."
The Commission will
make a (non-binding) recommendation to the Board of School Directors
by December 13, 2006, which must formulate a referendum question
regarding property tax relief and approval of increasing the
EIT or conversion to a PIT for the May 15, 2007 primary ballot.
Again, there will be no additional funds for the District, primarily
a shift in tax revenue.
Budget
Timeline
-
In December 2005, the Board posted an "Un-Adopted"
Preliminary Budget of $54,413,400, at the 1.1 mill increase.
There were numerous assumptions in this draft, which expanded
ove the subsequent six months, when personnel and operational
factors were finalized.
-
From January through April, 2006, numerous
meetings were held with the Board and the Citizen's Budget
Committee addressing the assumptions, exceptions, and
future commitments by the District. In order to meet these
challenges the administration proposed a budget of $56,650,032,
with a millage of 25.86.
-
In May 2006, the Board adopted a Proposed
Budget of $55,359,370, with a millage of 24.91. The Final
budget of $54,942,500 with a millage rate of 24.61 was
adopted on June 21, 2006.
District
Challenges
In preparing the budget,
numerous issues confronted BWSD that extend beyond the current
school year:
-
changes in student population
-
declining property market values
-
no property tax increase since 2003
-
reduction in reserves
-
increased debt service
-
establishing a capital reserve fund and OPEB (post-employment
benefit) reserves
-
the construction project.
To fund the 2005-06
budget of $54,329,611, the Board proposed using $2,022,755 from
reserves to offset any tax increase and revenue shortfall. This
would result in $822,840 in reserves to begin the current year.
The Unaudited '05-06 depicted in the Financial Summary table
indicates that projected reserves could approach $1.7 million,
which is below the 5% threshold, or $2.7 million.
Assumptions incorporated
in the adopted budget include:
-
$9.7 million reduction in property assessment
-
$254,000 less real estate revenue
-
$290,000 increase in EIT
-
delinquent tax collection at historic levels
-
increased state funding of 1.7%
-
$1.8 million reduction in salaries as a result of 21
teacher retirements and staff reductions
-
increased contributions to health benefits and retirement
of $1.1 million
-
over $400,000 lower transportation costs due to financing
of bus replacements
-
9% reduction in supplies
-
$245,000 reduction in book adoptions
-
20% reduction in purchased/contracted services
-
allowance for Capital Reserve Fund of $100,000 and OPEB
Fund of $250,000
-
increase in bond debt service of $450,000.
Key
Elements
In conjunction with
the above assumptions, there are some key elements to take into
account that reflect the level of service provided to support
the District's academic programs:
-
Regular education - 9% increase in technology
support investment
-
Special Education - $5.6 million, or 10%
of budget for learning and emotional support, life
skills and speech
-
Vocational Education - $2.6 million for
vocational, charter, vo-tech and federal programs
-
Pupil Services - $1.7 million for guidance, social
workers and psychological services
-
Instructional Staff - $1.2 million for library and curriculum
support
-
Administration - 3% increase in support for insurance,
staff, and tax collection
-
Maintenance - $6.2 million to manage 940,000 square
feet of buildings, site operations and capital improvements
-
Student Activities & Programs - $1.3 million
-
Debt Financing - $6.5 million for annual debt service
($78.8 million aggregate debt and interest) and lease
financing.
Summary
As this school year
begins, the challenges presented to the District will undoubtedly
be met, and initiatives will emerge that move the District to
higher achievement levels. Budgeting is an arduous process and
one that requires support by the administration, employees,
the School Board and the community.
Baldwin
High School Project
Following ground breaking
in January, the 10 Prime contractors began Phase 1, which included
demolition
of the pool and locker room and construction of the new gymnasium,
natatorium and locker rooms, as well
as various site utility works. The new gymnasium will be completed
by December 2006.
Phase 2A commenced in
June including the construction of new athletic offices, and
constructing ten
classrooms in the existing gymnasium, both of which are now
being occupied by students and administration.
Phase 2B also started
in June with the relocation of Beall Drive and Route 51 traffic
signalization; a portion
of the south wing of the existing building was demolished; modular
classrooms were added to the site for
computer labs.
Phase 2 is underway
with the demolition of the remaining south wing and construction
of the new building
to contain science labs, Tech Ed classrooms, large group instruction
space, and faculty & guidance offices.
Completion of Phase 2B and 2 will occur by August 2007. The
natatorium and spectator seating area within
Phase 1 will be completed concurrent with Phase 2.
PROJECT PHASING
Phase 3 Jun 07 - Aug 08 Demo west wing; new three story classroom
wing
Phase 4 Jun 07 - Aug 07 New stair towers & upgrade and link
all corridors
Phase 5 Jun 08 - Jan 09 Demo and add new choral rooms; auditorium
upgrades
Administration Building, 4900 Curry Road,
Pittsburgh, PA 15236
