Committee of the Whole- Budget Work Session
February 19, 2019
Members of the Committee of the Whole- Budget Work Session include Ms Tracy Lisi (Chair), Mr John Auerbach, Mr Charles Beatty, Mr Jeff Billig, Mr Rick Dumont, Mr Herman Engel, Ms Lynn Weber, Mr Bill Wood, and Ms Bonnie Wolff. All attended the meeting. Mr Billig participated via phone.
This meeting is the first of 5 budget working sessions. The objective of the meeting was to review the revenue streams for the proposed budget. On March 19th, proposed expenditures will be assessed followed by a discussion of the capital budget on April 11th. A discussion of the proposed budget for adoption is scheduled for the April 25th meeting. Two additional work sessions are planned for May 20 and 28th followed by the adoption of the final budget on June 6th.
Meeting Agenda: https://www.boarddocs.com/pa/avongrove/Board.nsf/Public#
The presentation for this meeting can be found at the link below:
Mr Dan Carsley, the Director of Business Administration and the Chief Financial Officer of the school district reviewed the sources of revenue for the school budget. Approximately 69% of the revenue for the school budget comes from local sources of which 64.12% is from real estate taxes. Approximately 31% of the revenue comes from the state government with less than 1% from the federal government. Thus the majority of the revenue to support the schools comes from local real estate taxes.
Mr Carsley presented 3 scenarios for the 2019-20 budget: a 3% real estate tax increase (Act 1 Index), a 2.5% real estate tax increase, and no real estate tax increase. A 3% tax increase could result in a reduction of ~$6.9 million from the fund balance while a 2.5% tax increase could result in a reduction of ~$7.2 million from the fund balance. No tax increase could result in an ~$8.6 million reduction in the fund balance. It was explained that these numbers were worst case since any increase in revenue from the state for the 2019-20 school budget is not included in the revenue estimate. Also money transferred to the capital fund and budget reserve is for future use and will not necessarily be spent in 2019-2020.
The administration is expected to recommend the 3% tax increase since they need to raise taxes as much as allowed by the state to pay for the estimated $220 million debt to build the new high school and renovate the existing high school.
Mr Carsley noted that the State Homestead/Farmstead funds (~$2,673,653) have not been deducted from the local revenue portion of the budget. This does not affect the overall budget since any money removed from the local revenue estimate is made up by an increase in state revenue.
Mr Carsley also discussed the impact to the school budget if the Jennersville Hospital request for non-profit status is granted. If the hospital is granted non-profit status, the AG school district could lose $400,000 in tax revenue per year. The magnitude of this loss will increase as the tax rate is increased year to year.
Ms Weber asked Mr Carsley about costs for the building the new high school. Mr Carsley responded that the cost for the new debt will be captured in the general fund. Borrowed money will be placed in the capital budget and any cost for the new facilities will be captured in the capital fund. Mr Auerbach asked that funds used for the new facilities be distinguished from other capital projects in the capital fund.
Mr Carsley noted that PA Ready to Learn Block grant will be discontinued for K-12 public schools. The state will transfer the money to the Basic Education Subsidy. The value of Ready to Learn Grant in 2018-19 was $754,725. The state is estimating an increase for AG school district of $140,000 for a total $894,725 for the 2019-20 school year.
Mr Auerbach asked about the impact of using the previous year’s state revenue numbers in the proposed school budget for the following year. The previous year’s numbers have consistently been lower than what is actually received from the state. Once the state budget is approved, Mr Auerbach would like to have the updated state revenue numbers included in the final budget.
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