Thursday, September 17, 2015

Worth Reading

As the state budget impasse continues, area school districts are being pushed ever closer to the financial danger zone.

While the first wave of local tax dollars are helping to carry districts through the budget stalemate, officials could be forced to borrow money — as early as October.

“Without a budget it makes it extremely difficult to operate,” Galeton Area School District Superintendent Brenda Freeman told The Era on Tuesday. “We are using our fund balance currently to pay our bills. That will only last until December.”

She said school officials have made a move to look into a tax and revenue anticipation note, money which would need to be acquired in November.

“Spending has been restricted and materials that were budgeted for are now on hold,” she said. “We continue to strive to do what is best for our students, but a budget impasse is making it very difficult.”

When no state money gets doled out, Freeman said the students get hit the hardest.

“Our focus is on maintaining operations locally for our students,” Otto-Eldred School District Superintendent Matt Splain said. “If the state cannot make its obligations, why should districts still need to do so?”

That school board was slated to approve bill payments for September during a meeting Tuesday evening, and Splain said with the bills prioritized for this month, the district’s portion of Public School Employees' Retirement System ended up at the bottom of the pile.

In fact, Splan said many district officials are considering withholding a PSERS payment, a move that would mean districts would face a fine.

“The state has an obligation to maintain a thorough and efficient public school system,” he said. “This requires a budget, which requires cooperation of the governor and Legislature, which will only happen if they are in session. The Pennsylvania Senate returned to session this week after the summer recess, the House returns next week. What message does that send Pennsylvania?”

All in all, he figures his school district would be able to maintain status quo until November. That’s when a major debt service is due for the Otto-Eldred district, he said. School officials may be forced to open a line of credit through the Pennsylvania School District Liquid Asset Fund if a state budget isn’t given the green light within a month, Splain said.

“Key revenue sources will be local property taxes, and federal money (has been) already expended,” he said. “For some reason, payment of 2014-15 federal money has been stopped.”

Meanwhile, in neighboring Cameron County, school district business manager Carl Mitchell said the state budget impasse impact has been minor, and the district has withheld large purchases, such as new football bleachers, in addition payments to other education agencies.

This month is the biggest for the receipt for property taxes, so Mitchell said the district has enough cash through at least the middle of October.

“If there is no budget by then, the district has two options: liquidate our fund balance investments or borrow,” Mitchell said.

Putting the budget impasse into perspective, Coudersport Area School District Superintendent Alanna Huck said a year ago the school district received about $775,000 in state funds.

“This year, we are using fund balance to pay bills and to make payroll,” she said. “The biggest expenses facing the district each month are payroll, health insurance and PSERS (Public School Employees' Retirement System) contributions.”

But a continuation of the the impasse, Huck fears that major cuts could be made to the district, impacting extra-curricular events and transportation.

In Elk County,  St. Marys Area School District Superintendent Brian Toth said a lack of state funds makes planning difficult beyond December.

“We are still under a variety of state mandates that cost money and I think that any of these should be suspended until a budget is passed,” he said.

With the school district spending, Toth said cyber-charter school bills are not being paid, and that would instead be deducted from state subsidy the district would receive.

“We are holding on investing any reserves in case we need to use them for operations,” Toth said.

Elsewhere, Port Allegany School District Superintendent Gary Buchsen said financial obligations are being been paid — yet, school officials have chosen to not reinvest a mature CD worth $894,000.

Meanwhile, Bradford Area School District officials have been able to maintain what Superintendent Katharine Pude calls a healthy fund balance.

“Tax collections have also been a positive cash flow source during this time,” she said. “We have been able to pay all of our bills and have not yet had to secure a line of credit in order to do so.”

As a matter of fact, Pude said that at the onset of the new school year, officials made needed purchases, including books, supplies and technology. Meanwhile, officials have requested the administration avoid purchasing non-essential items.

In the Kane Area School District, business manager Steve Perry said many measures have been eyed in bringing in more money, including certificates of deposit in the retirement rate stabilization fund worth more than $5 million; a capital reserve fund that has more than $3 million; and a loan through local financial institutions.

And come Nov. 1, the  district’s semi-annual debt service payment of $824,645 is due, and that could be paid from the district’s capital reserve fund, Perry said.

“Our hopes are that if a budget is not passed in the near future, a stop-gap budget will be approved by our elected officials which will allow for districts to avoid the unnecessary costs of borrowing,” Perry said.

As for the smallest school district in the state, Austin, business manager Peggy Derr said she is hoping that $1.2 million, which includes local tax dollars, will be enough to sustain the district until December. Otherwise, she said, a tax anticipation note could be taken out.

“We’re still hanging in there,” she said.

For Oswayo Valley School District (Shinglehouse) business manager Jackie Fosmer, she said she has been approved by the school board to secure a line of credit if the time comes. In the interim, payments are being met, thanks to the fund balance.

And as the budget stalemate drags on, Huck has some words of advice for area residents.

“I would encourage everyone to please contact their senator, representative and the governor to pressure them to get a budget completed and meet their constitutional duty to our students,” she said. “Our students should not be a pawn in the political fight in Harrisburg.”

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