Ephrata Area School District OKs 2.5 percent tax hike with a 5-4 vote

By on June 21, 2017

Ephrata Area School District residents will see their school property taxes increase slightly more than a half mill this year, or .51 mill, increasing millage from 20.45 to 20.96, after the 2017-18 district budget received final approval Monday.

After a detailed presentation of facts and figures concerning the school district’s upcoming budget, school board members remained so divided in determining the increase in taxes that Stayer suggested taking two votes; first, at an increase of 2.5 percent, and if that didn’t get a majority, then trying for an increase of 2 percent.

It was close — five to four — but enough board members voted for the 2.5 percent increase that the second vote didn’t need to be taken.

Voting for the higher increase of 2.5 percent were Robert Miller, Chris Weber, Judy Beiler, Ted Kachel, and Stayer.

“Ephrata has done a good job of keeping taxes low in comparison to other school districts,” Weber said, explaining that he felt a 2.5 percent increase was reasonable.

“Seeing the uncertainty with the state (funding), I tend to go for the higher side; 2.5 or 2.7 percent,” Kachel said. “We don’t want to have to reduce our offerings and programs for the students.”

Voting against the 2.5 percent increase were Richard Gehman, Jenny Miller, Tim Stauffer, and Glenn Martin.

“It was difficult to vote ‘no,’ but I’m in favor of people keeping their money,” Stauffer said. “I like the two percent because we’re still running a surplus.”

It could have been worse.

Last month, the board unanimously passed a preliminary budget of $65,798,813 with a 3.1 percent tax increase.

By going with the 2.5 percent increase instead of 3.1, homeowners of a property assessed at $140,968 save about $14. The owner of that property will be paying about $72 more this year, instead of the $89 they’d be paying if the board would have voted for the 3.1 percent increase.

A property owner with that assessed value is currently paying $2,882.80 in real estate taxes.

Superintendent Dr. Brian Troop commended the board for taking their duties so seriously when determining the budget.

“I know you looked at it from a lot of different perspectives and I know it wasn’t an easy decision,” Troop said.

Expenses from all sides keep escalating, Stayer said, including mandated pensions, charter schools, and special education.

“Pension system costs constitute the most tax increases throughout the state,” Stayer said. “Even if we did (the highest allowable increase) Act One , it couldn’t make up for the pension increases.”

In the prior seven years, (2009-17), PSER’s costs increased to $7.1 million, while new taxes only increased $5.4 million.

“Under Act One limitations, we couldn’t raise taxes to cover those costs,” Stayer said.

The state pension bill has been signed, Stayer said, but won’t be providing relief to school districts anytime soon.

Making the budget decision more difficult is that school districts don’t know what help they can expect from state and federal funding.

“We have to pass our budget tonight with very little idea of what resources we have coming from the state,” Stayer said.

In a news release from the PSBA (Pennsylvania School Board Association), $100 million earmarked for education by Governor Tom Wolf may be in jeopardy, Stayer told the board.

At this time, administration believes they will be receiving about $1.6 million from the federal government.

“There’s plenty of uncertainty, but our focus will remain on our students and we weigh that against our responsibility to taxpayers,” Stayer said. “We rely heavily on local taxpayers.”

Property tax reform is on the horizon, Stayer said, explaining he spoke recently with a state legislator who believes property tax reform will happen in a year or two.

Real estate taxes are the single largest contributor to the district’s budget, amounting to close to 69 percent. State funding contributes about 30 percent, while federal funds amount to 1.3 percent.

Salaries and pension benefits are the largest expenditure for the district, amounting to about $44 million.

The two largest pieces of the budget ‘pie,’ salaries account for 43.2 percent of the entire budget and taxes and benefits account for 25.9 percent of the budget.

Retirement costs increased about $867,000 for the coming year.

“Obviously, PSERS (Pennsylvania State Employees Retirement System) is one of the biggest challenges for us,” Stayer said. “We’re really in need of pension reform and charter school reform.”

Special education costs have also increased to about $7.9 million.

“Obviously, we have a lot of children with special needs and we want to provide for those children, but the state has not increased their (funding) enough,” Stayer said.

School districts should have about eight to 12 percent of their budget on hand in their fund balance, according to state auditors, Stayer said.

A fund balance can keep the district afloat if financial problems crop up, as long as there’s enough of it, he said.

With the tax increase of 2.5 percent, the district’s fund balance would be about $17,426,850 in the $65 million budget.

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