In the two months since a preliminary presentation of 2020-21 budget figures, Peters Township School District’s financial outlook has taken a hit because of factors related to COVID-19.
A projected gap between revenues and expenditures for the coming academic year has widened to nearly $1.8 million under a scenario that maintains the district’s real estate tax rate at 13.81 mills.
Even accounting for a tax increase of 2.6%, the maximum set in accord with state Act 1 of 2006, the difference at this point is $691,180 to the negative.
The latest figures were reported during a meeting of Peters Township School Board’s finance committee, held April 13 through a videoconferencing platform and later made available on Peters Township Community Television.
On the revenue side of the budget, projections have dropped by almost $600,000 since February.
With unemployment skyrocketing because of precautions against the spread of COVID-19, collection of earned income tax has been revised downward by 377,208. That represents “a little less than two years ago,” district business manager Brad Rau said, and a “5% decrease of what our last actual collection was.”
Another diminishing revenue source is interest earnings on investments, with $241,644 representing “our best guess right now,” according to Rau. By comparison, the district earned $604,111 for 2018-19 and is on target to reach $600,000 again for current year, he said.
Projections for expenditures also have dropped since February, primarily because of retirements in the past two months. But the savings does not come close to compensating for lower revenues.
“We’ll continue to dig in on the expenditures side to see if we can do any better on those numbers,” Rau said about the difference. “We might have to tweak some of those revenue numbers, maybe in a bad way, too, which would actually make our gap grow a little bit.”
To compensate, the district can tap into its unassigned fund balance, a surplus generally set aside for unforeseen circumstances.
“We are in a strong position to meet this crisis with our fund balance but also with the ability to control some expenses,” said the Rev. Hardy, finance committee chairman.
He has reviewed various possibilities with Rau and Tom McMurray, board president.
“We have the ability to make some movements there, to be a little bit tighter, but we don’t do it because we’re trying to give you the realistic picture and we’re not trying to affect operations,” Hardy said.
A 2.6% increase in the real estate tax rate represents .35 mills, meaning the owner of property with an assessed value of $300,000, near Peters Township’s median, would pay an extra $105. The new rate would be 14.16 mills.
Regarding the state-mandated closure of school buildings for the remainder of the academic year, Rau said some savings should result. But given with declines in revenue sources and fixed amounts for the vast majority of expenditures, any impact to the district’s coffers would be negligible.
The school board plans to vote on a preliminary budget in May, and the state requires adoption of the final spending plan by June 30.