UNION TWP. — The proposed 2014-15 Northwest Area School District budget that is currently on the table still calls for a 6 percent increase in real estate taxes, Albert Melone, business consultant, said on Wednesay night.
He said it still has a deficit of $388,641.
The deficit, through teacher furloughs and program cuts, has actually been reduced from a projected $600,000 in January, but still presents a major problem for the school board, because as Melone said, “Northwest just doesn’t have a spending problem, it has a revenue problem.”
As it stands, Northwest Area’s tax hike is at the state index allowed by Act 1. Moreover, Melone pointed out a tax hike to 9.9871 mills is projected to produce $277,728, which doesn’t eradicate the deficit.
A mill is $1 in tax for every $1,000 of assessed valuation.
A balanced budget is required by the state Department of Education by June 30. The School Board has scheduled a special session on June 30 at 6 p.m. to ratify the budget that calls for only $18,194,592 in revenue but $18,583,234 in proposed spending.
Compounding the situation, Melone said, is the Harrisburg budget process that’s in limbo because of disputes between the administration of Gov. Tom Corbett and Legislature over how to proceed to erase a billion-dollar shortfall.
The impact, Melone said, is that Northwest Area, which relies on more than $11 million in state funding to sustain its programs, has seen a reduction in state subsidy within the past week.
“The state doesn’t have any money, either,” Melone said.
Melone said the district’s current fund balance of $421,000 doesn’t bode well for the long-range stability of the district. He said other districts function with at least a $1 million balance. Because of revenue difficulties, Melone sees Northwest’s financial crisis extending into the 2015-16 and 2016-17 school terms.
Director Mark Lehnowsky speculated there could come a time next year when Northwest wouldn’t be able to pay its bills, a situation that Solicitor John Audi pointed out could lead to Northwest Area being declared a “distressed district,” and see a resultant state takeover of administrative functions.
“If that happens,” Melone said, “the state will just enact taxes to cover expense without consideration to the economy and financial standing of the district’s residents.”
In another fiscal matter, the board voted to accept the quote of First Keystone Community Bank for a tax anticipation note of $2.6 million with a fixed interest rate of .95 percent.
The proposal of Bollinger, Inc., $7,891, was accepted for sports insurance and $88,191 was approved for transfer from the capital projects account to pay for land development, fieldhouse rehabilitation and window installation projects.