"More than any other budget in the past or future ... it is very important that revenues and expenditures match next year," Vensel told the board. That is because Chambersburg and many of the other 500 school districts in the state will likely opt into school property tax reform, which will limit the ability of boards to raise property taxes beyond an inflationary index set by the state.
Districts that propose raising taxes higher than that index will have to submit them to voters for a referendum in the spring primary, the law states. The process of getting an initiative on the ballot for the 2006 May primary, however, begins in February, about the time districts learn how much money each will get in state subsidies, Vensel said.
Vensel said that means the district should fully fund the 2005-06 budget without taking money from cash reserves, as it did in 2004-05 when about $1 million was used to balance the budget. Next year will become the "base year" by which future real estate tax increases are calculated, he said.
Vensel outlined a budget with a 6.51 percent increase of $4.7 million. The biggest increase is $1.1 million, or 3 percent, for salaries and wages to $38.2 million. The district's debt payments, however, will go up by about 34 percent to $3.9 million to begin paying for a $116 million program for a new high school and two elementary schools.
Health-care costs are projected to increase 12 percent to more than $8 million, Vensel projected. The district's contribution to the Pennsylvania State Employees Retirement System is expected to go up 18.25 percent to $1.8 million.
If the board votes by May 30 to participate in school property tax reform and be eligible for gambling revenues to fund future tax relief, Vensel said the district will have to change its budget timetable for 2006-07.
The new law requires districts to tentatively approve budgets in January. That approval, however, is about a month ahead of when Gov. Ed Rendell will unveil his proposed state budget, which includes how much districts will receive in state subsidies, Vensel said.
That will mean districts will have to engage in some guesswork about state funding in preparing future budgets. Vensel said he expects to present a draft of the 2006-07 budget to the board this December.