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MILL HALL -- The Keystone Central School District is facing a $1.5 million deficit and its board of directors must decide if the 2024-2025 budget will feature a tax increase.
The board heard a presentation from Business Manager Joni MacIntyre during a work session Thursday night.
A focal point of MacIntyre's presentation regarded a potential deficit of $1.5 million and how to close the gap.
At the board's work session in March, MacIntyre said this gap was due to a loss in funding from the Commonwealth of Pennsylvania and other factors. However, she noted the administration is taking steps to close that gap for the 2024-2025 school year.
"I do believe we'll close that gap. We may not close it entirely but we'll get close," she said.
MacIntyre's presentation offered a breakdown that featured the district's potential financial standings based on various tiers of a tax increase -- from none up to a 75 percent increase.
The administration recommended two options.
The first recommendation involves a decreased budget shortfall with a partial tax increase of 3.55 percent for the 2024-2025 school year. This would cause taxes to increase $55 per year for the average assessed home.
MacIntyre's second recommendation was an increase of 1.78 percent for 2024-2025. The increase would mean an extra $35 per year based on average assessed home value.
When it came time for board discussion, many members noted its difficulties each year often lie in the lack of state funding.
"We're sitting here trying to build a budget, guessing what the Commonwealth is going to provide us. And they're required by law to provide public education," Board President Butch Knauff said.
Knauff referenced the state's loss in courts regarding fair funding to public education.
"They lost in court because they knew their funding wasn't fair. They're sitting down in Harrisburg trying to figure out how they're going to do it and in the meantime we're sitting here suffering, trying to figure out how we're going to pay our bills and with the least impact on the citizens of Keystone Central," he said.
Knauff noted the district was promised almost $5 million for the 2023-2024 school year. That money was reduced by roughly $1.5 million.
"We built our budget on the $5 million they promised us. So we're sitting here not trying to guess what they're going to promise us for this year and hopefully we can build a budget accordingly without being too far off," Knauff said.
Knauff encouraged people to speak to their local representatives to push for the public education budget to move forward.
In the meantime, he said legislators are pushing off tax increases on local school districts.
"We're kind of stuck between a rock and a hard place trying to figure out where we're going to get money, guessing what they're going to give us and rubbing the crystal ball and sometimes it works and sometimes it doesn't," he said.
MacIntyre noted she is directed by the state to base the district's budget off a flat revenue rate.
"Our revenue is not keeping up with our expenses. And you're right, there are a lot of unknowns," she said.
Board Member Chris Scaff asked MacIntyre if there were any other possible avenues the board could take to cut expenses.
"We all know Clinton County doesn't have the industrial infrastructure that Lycoming or Centre counties have to bring in tax revenue. We have people at our own district that are working here and don't pay Clinton County taxes because they don't live here," Scaff said. "And we need to draw people in and industry to help cover taxes. So until we can do that, what can we do as a group to start dropping some expenses?"
Superintendent Dr. Francis Redmon noted MacIntyre's presentation reviewed various avenues the district is taking currently to cut expenses.Those include being selective in what positions will be filled based on student need.
"We're being really careful about what positions we have open and which things we have to hire for and which we don't have to hire for," Redmon said.
MacIntyre's presentation noted the district is also offering an Early Retirement Incentive, which has already seen some acceptances; reevaluating insurances; evaluating software programs district wide; and putting a stop to building budget spending beginning April 3.
Redmon noted other moves the district is taking to cut expenses is evaluating contracts with vendors.
"Everyday we're looking for ways to do it," Redmon said.
Scaff said the district needs to cut costs, not by just the thousands, but a couple million dollars.
"We have to lower it. Because the tax base, the taxpayers, are moving out. There's nothing here to keep them," he said.
Board member Jeff Johnston asked MacIntyre what effect a no-tax increase budget would have for the district.
MacIntyre said it would cause the district to dip into its fund balance and reduce it to about 4.2 percent from its 8 percent.
At a budget presentation in March, MacIntyre said 8 percent is the healthiest scenario to ensure a return on the district's interest rates.
Johnston noted tapping into the fund balance would be almost like "living off your savings account."
Much like Knauff, Johnston noted the conversation is the same each year due to the Commonwealth's hesitancy in committing funding.
"This is like Groundhog Day. Every single year we're having the same discussion because the legislators do not do their jobs," he said. "I certainly, like everybody else, don't want any kind of a tax increase. But I also think whenever you start to tap into your fund balance like that you're kind of on a slippery slope."
Board member Elisabeth Lynch said constituents she's spoken to have expressed that they don't mind paying more in taxes -- but want to ensure that the funding is properly invested.
She asked if it would be possible to present lists that would showcase what cuts could be made and how it could have an effect.
"I'm speaking from what people have said to me. I'm not talking about low income families, I'm sorry, I don't have your voice sitting here with me, I'm talking about a medium economic people," she said. "Show them something besides that we are just trying to put our finger in the dam so we don't go bankrupt."
"Right now I think that's what we're doing, we're putting our finger in the dam to not go bankrupt. We've been in this kind of stalemate situation for a while," she continued. "We still have sort of the same grades, the same sort of percentage of bullying but we're still kind of in this stalemate."
Knauff suggested the board speak to their constituents to get an idea of what the public is looking for before the board's voting session on April 11 where it must provide a recommendation to MacIntyre.
A proposed final budget will be presented to the board on May 9 with final adoption expected to take place on June 13.
MacIntyre's budget presentation may be viewed in the district's Board Docs at go.boarddocs.com/pa/keyc/Board.nsf/Public