School districts to PA: ‘pay up;’ The taxpayer price tag for unfunded liabilities
“Over the past two years, the [school] board has both raised taxes and dipped into its reserves in order to compensate for shortfalls in state and federal funding… and beginning with the 2014-2015 school year, the district’s reserves will either be nearly depleted or completely depleted,” a situation the letter called “a dangerous financial position.”
“Would the board have entered into the construction and bond securing process if we thought the state would not follow through on its part of the obligation? No,” the letter states.
The letter also blames state-mandated pension contributions for district employees. “This next budget will see an increase of approximately $700,000 in pension costs, raising the district’s contribution rate from 16.9% to 21.4%.” [WWSD’s] external auditors warn, “Pension contributions… would likely continue to increase into the near future until the district’s contribution rates reached 29%.”
Now, because the state has a 2% cap on how much a school district can raise its taxes, WWSD has applied to the Commonwealth for permission “if necessary” to increase taxes up to 6.01% without a voter referendum.
So here we are: the state says it cannot afford to pay, but what makes state officials think that local taxpayers, like those in Western Wayne, can afford to do so when the Commonwealth cannot?
The moratorium is slated to expire this summer unless the legislature extends it, and the governor is recommending an extension for another fiscal year. Today we call on the legislature to let the moratorium expire (at least for those school districts that have already earned PDE PlanCon approval and/or completed their construction projects, such as for the EverGreen School); to fully fund approved projects in the new legislative budget now being worked on in Harrisburg; and to instruct PDE to expedite reform of the PlanCon System under guidelines provided by the legislature (currently PDE reportedly has no timetable for completing this reform).
Finally, we believe that Pennsylvania missed an opportunity to properly fund education when it declined to implement a severance tax on natural gas extraction, choosing instead the governor’s preference for an impact fee, which saved the state’s natural gas industry millions. It is never too late for the administration to change its policies and implement the severance tax, earmarking the revenues for education.