Board projects budget shortfall: Tax hike, fund balance may be needed in N. Cambria

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February 20, 2013

Board projects budget shortfall: Tax hike, fund balance may be needed in N. Cambria

Kathy Mellott kmellott@tribdem.com The Tribune-Democrat Wed Feb 20, 2013, 11:18 PM EST

NORTHERN CAMBRIA — The Northern Cambria school board is taking a wait-and-see attitude as it looks for ways to balance its 2013-14 budget in the hopes of minimizing the impact on taxpayers and the district’s fund balance.

Board members have rejected the option of adopting a preliminary budget, forcing them to hold any tax increase to the inflation index of 1.2 mills or continue through the process until late spring.

That means the board will have to apply to the state for an exception if a tax increase is levied, said district business manager April Miller.

Preliminary figures outlined by Miller for the board this week show the next school year’s budget at expenditures at $16,388,678 and revenue at $15,579,964, leaving a shortfall of $808,714.

The revenue figure reflects an increase of $92,000 in state subsidy, Miller said.

With each mill generating $50,700, a tax increase of 15 or 16 mills would be needed to cover the shortfall using local tax dollars only.

A fund balance of $1.6 million is projected for the end of June, but using only that money to fill the deficit gap will eat up much of the balance.

“That $800,000 is about one-half our fund balance, which means in two years we won’t have a fund balance,” board member Delvin Lockard said.

Responding to complaints from residents concerned about the district’s constantly changing fund balance, board member Roland Paronish said that is how a fund balance operates.

“The fund balance is like your checkbook,” he told the 50 or so residents attending the special board meeting. “Our fund balance changes daily.”

At the start of the 2012-13 year, projections were the district would need to use about $900,000 out of the fund balance, he said. If all holds steady through the end of June, that figure may be about $360,000.

Next year’s budget in its preliminary form is up about $250,000, or 1.5 percent, but the gap between revenue and expenditures is similar to the current year.

The figure does not include any salary increases because the board is still in negotiations.

In June 2012, the board opted out of any millage increase, relying on the fund balance to bridge the deficit gap, but only after reducing the number of classroom aides, maintenance workers and other cuts.

This year, the board has been examining many expenditures, including small things such as donations to the community library.

The district expects to see some savings in its payments to the Admiral Peary Vocational Technical School.

With 37 students opting to attend the Ebensburg-based school this year, the $432,000 budgeted was significantly higher than needed, Miller said.

She is anticipating a slight increase in the number for the upcoming school year, but even with 42 attending, that should be just slightly above $280,000, she said.

A category that is coming in significantly over budget is the cost of attorney fees.

Budgeted was $25,000, and already those costs have exceeded $50,000 for the current year, Miller said.

She has plugged the $50,000 figure in for legal costs for the upcoming budget year.

Tentative approval of a 2013-14 budget likely will come in late spring, with state law requiring that the spending plan and tax rate be set by June 30.