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Chambersburg School Board to review draft of 2007-08 budget

January 14, 2007|by DON AINES

CHAMBERSBURG, PA. - The Chambersburg Area School District can raise property taxes 2.9 mills in 2007-08 under a cap imposed by Pennsylvania's Act 1, but exceptions included in the school property tax reform law could allow taxes to go higher without the district having to put the budget before voters in a referendum.

The draft budget will be reviewed Wednesday by the Chambersburg School Board, Business Manager Rick Vensel said. A vote on the preliminary budget is set for Feb. 7, he said.

Vensel declined to discuss the specific numbers in the budget until it is presented to the board. While a tax increase of more than 2.9 mills is possible, he said the district will not raise taxes as high as it could under the law.

"We're not going to use all of our index and exceptions," Vensel said.

The district's tax rate is 70.68 mills, or $70.68 for every $1,000 of assessed value on a property.

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Districts can raise taxes by no more than an inflationary index set by the state without going to referendum unless they meet one or more of the 10 exceptions in the law. The state has set the index for Chambersburg at 4.1 percent for 2007-08, Vensel said.

One of the exceptions is grandfathered debt. In 2004, Chambersburg incurred $116 million in debt to pay for construction projects prior to the effective date for Act 72, a law similar to Act 1 that was rejected by most of Pennsylvania's 501 school districts.

Unlike Act 72, Act 1 mandates that districts place on the May 15 ballot a referendum on shifting some of the tax burden from property to income-based taxes. The law also mandates that budgets exceeding the inflationary cap be placed on the May primary ballot to be approved or rejected by voters.

The district can raise taxes above its 4.1 percent cap to pay for debt service on existing debt, to meet the terms of existing labor agreements and for increases in retirement contributions, health care and special education costs above what the index allows. Some of those costs, such as retirement contributions, will be in double digits and are mandated by the state.

The exceptions the district will seek to include in the budget have to be approved by the state Department of Education.

"A budget is an operational plan written in financial language," Vensel said. Budgets in the past have looked primarily at the revenue and expenditure sides of how to achieve educational goals, but this and future budgets will be will governed by the limits imposed by Act 1, he said.

"Act 1 does not say word one about education, but it says a lot about finances," Vensel said. While it will not measurably affect next year's budget, Vensel said it will in five to seven years as districts are faced with negotiating new staff and faculty contracts, or need to borrow money for projects.

One unintended consequence of the law is that some school boards might choose to raise taxes to the cap level even if a tax increase is not needed. Cap space available one year cannot be rolled over to the next, Vensel said.

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