Mt. Lebanon schools face $2.6 million shortfall in budget

Published Mar 18, 2014 at 8:37 am (Updated Mar 18, 2014 at 8:37 am)

Mt. Lebanon school district will have to raise millage again or “decimate” its education system, school board president Elaine Cappucci said at the board’s March 17 meeting. This, despite what board member Dan Remely described as a “tax revolt” by recent home buyers.

The district faces a $2.6 million shortfall as it enters budget season. The board intends to close the gap by increasing millage, cutting costs and allocating excess fund balance.

Exactly how much fund balance to use remains a subject for debate.

This year the administration projects the district will finish around $800,000 under budget, and Mt. Lebanon typically does underspend its operating budget. The issue with using excess fund balance to plug recurring budget shortfalls, however, is that it depletes reserves that provide the district with a cushion in the event of sudden financial hardship.

Director of fiscal services Jan Klein said she would be comfortable putting $750,000 of fund balance toward the budget gap. “If we pare back and we’re really close, if next year we don’t get more revenue or PlanCon funds, that’s money we have to make up,” she said. “That could put us at a significant disadvantage the next year. Certainly the year after. Act 1 does not allow us to recover that money by raising millage.”

Klein explained that a key use for fund balance is financing capital projects. Otherwise the district might have to issue debt to fund those improvements. Fund balance also serves as an emergency buffer for grievances, unexpected declines in transfer tax revenues and the extended delay of PlanCon reimbursement for the high school renovation project. She added that it is not normal for Mt. Lebanon schools to underspend their budget by $1 million.

Most board members hope to target somewhere between a 0.5 and 0.55 mill tax increase, and to use between $750,000 and $1 million of the fund balance.

Dan Remely was alone in preferring a significantly smaller tax increase of .25 mills. He favors using $1.5 million of fund balance.

“There comes a point where we have to figure out some way to protect taxpayers as well as our other stakeholders,” he said. “I am concerned we nearly have a tax revolt going here. Our schools draw people into Mt. Lebanon. These families are then being taxed even further, as we’re seeing in the papers.”

Remely’s comment references a controversial practice whereby the municipality of Mt. Lebanon targeted recent home buyers for property reassessments at or very near their homes’ sale prices – a practice the affected families have dubbed the “Mt. Lebanon Newcomer’s Tax.” Some of these residents’ tax bills increased by thousands of dollars following their reassessments.

Conspicuously absent from the school board’s discussion were specific figures for the total cost reductions needed to balance the budget. Based on estimates mentioned at the previous board meeting, that figure could be several hundred thousand dollars.

At the March 10 meeting, superintendent Dr. Timothy Steinhauer estimated that with a .47 mill tax increase, the budget gap would shrink to about $1.4 million. Assuming the board allocates $1 million of fund balance that would still leave $400,000 in expenses to trim.

That is, of course, only a hypothetical scenario.

Going forward the administration will produce a list of proposed cost reductions, as well as an assessment of their likely impact on educational programming.

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