Ephrata cuts back tax increase Two board members still oppose budget which reduced hike from 2 to 1 percent

By on June 19, 2013

By:

GARY P. KLINGER Review Correspondent

, Staff Writer

The

Ephrata

Review

The

Ephrata

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“This is a deficit budget.”

That was a comment by Ephrata Area School District Board President Tim Stayer in the moments leading up to a vote on the final budget for the 2013-14 school year.

Indeed, school taxes will be going up -but not by as much as originally proposed in the preliminary budget.

The final budget adopted by the school board on a 7-2 vote will increase taxes by 1 percent, raising the district millage rate to 19.6. That will hike the tax bill on a $150,000 assessed property by $29 per year. The preliminary budget passed at the May 13 school board meeting called for a 2.06 percent and a .40 mil increase in taxes.The average assessed property value for residential real estate in Ephrata’s district is $138,000.

Even with the tax increase, the revenue generated was not enough to balance the budget without the district dipping into the district’s reserve fund to the tune of $709,000.

While only five residents from the community were present at Monday night’s meeting, the board president still reviewed the budget process for those present.

Stayer noted that over 90 percent of the real estate in the district is residential and comprises over 74 percent of the revenue generated by property taxes.

“We recognize that homeowners bear the brunt when it comes to real estate taxes,” explained Stayer. “We are not like other school districts that enjoy a higher industrial base.”

The property tax approved generates an additional $339,172.00, not nearly enough to cover the $1.1 million in additional PSERS (Pennsylvania School Employees Retirement System) liability. The 2013-2014 school year is the second in a string of years in which Ephrata, like all school districts, will see large increases in their budgets in that category due to state mandated increased district contributions to the pension program.

In fact, short of major reforms or intervention at the state level, EASD leaders project an additional $1.1M in PSERS obligations in each of the next four school years. And, even if the school district were to increase taxes by the max allowed under Act 1 guidelines, it would not be enough to balance the budget.

While some have questioned the need to raise taxes considering the existence of a reserve fund, Stayer defended that fund, pointing to the many ways in which a fund balance is essential to the long term financial health of the district.

Stayer explained that not only does the existence of a healthy reserve fund affect the district’s credit worthiness and credit rating, it also impacts the interest rates the district has to pay in the event it must borrow money as well as the rates it pays for insurance. Stayer likened the reserve fund to the family financial equivalent of an emergency fund.

“We are required to pass a budget tonight,” added Stayer. “But the state is not required to pass theirs for another several weeks.”

The reserve fund, explained Stayer, is designed to provide much needed cash flow as needed until state funds become necessary. And by design, it is to be used for one-time expenditures not covered under any other budget line item.

In explaining the importance of the reserve funds, Stayer reminded board members how as recently as 2001 the district had no reserve funds. He pointed out how, at that time, district buildings were in bad shape yet lacked the capital reserve funds to address those issues.

And on this point, Stayer was adamant: “This is NOT to mask the true cost of education.”

Crediting the foresight and leadership of the school administration and school boards over the past several years, Stayer said the fact the district now had some funds held in reserve, meant the district could balance the budget without having to make drastic cuts to programming. Yet he also warned:

“If projections hold true, that reserve fund will dwindle quickly over the next several years.”

Over the past several weeks there had been much conversation at the committee level as fellow board members weighed feedback from their constituents. Two board members in particular, came to Monday night’s meeting prepared to support a budget that would feature zero tax increases. Board members Kay Kurtz and Chris Weber both stood their ground and voted NO both on the overall budget measure as well as the measure setting and authorizing tax rates for the school year.

“I would go to a zero tax increase budget,” said Kurtz. “I know there is some thinking that would cut us short and maybe I’m naïve that down the road things will improve. I could support such a budget with the understanding among taxpayers that next year could mean passing a budget with the maximum increase.”

Several other members presented comments in favor of the eventual 1 percent increase budget.

“I’ve given this a lot of consideration,” said board member Bob Miller. “We are very fortunate to have an administration and board to have put us in this very strong positions where we are now. This is due to a lot of pre-planning. I could support a zero increase budget at this time but you have to look at the long term which is not looking all that pretty with PSERS coming down the road. I would think the minimal 1 percent would be reasonable. The logical conclusion would be to be prudent and pass a 1 percent increase.

Board member Judy Beiler shared how hard it was for her to support the tax increase. She reminded those present that she is a parent of an elementary school student, a resident and a taxpayer herself.

“We face financial challenges, but because of the financial forethought of district leaders, we are in a much better place then many of our neighboring districts,” said Beiler. “We are going to use some of our fund balance to meet budget and that won’t last very long.”

Beiler also pointed out the importance of maintaining a quality education at Ephrata.

“As we teach our students to compete in a global economy we have to take this very seriously,” added Beiler. “I pay taxes, too. I really wrestled with this but if the current outlook continues we will need to increase taxes to the max every year. That’s really tough.”

Board member Jenny Miller was unable to attend Monday night’s meeting in person, but was nonetheless a part of the entire meeting via telephone conference call.

Arthur Sauder of Ephrata was the lone visitor to comment and expressed his dissatisfaction on the matter.

“I can’t understand why we have to keep going up,” said Sauder. “If it is an emergency then shouldn’t it come out of the fund balance? Seniors have no more money coming in. Everything else seems to be going up from taxes to everything else. These reserve funds that they have…if they are supposed to be saved for emergencies, why not take it out of there instead of raising taxes.”

And finally, Monday night’s meeting marked the end of an era. It was Dr. Gerald Rosati’s final school board meeting prior to his retirement.

Stayer noted Rosati’s famous desire to remain out of the spotlight but nonetheless spent a moment to honor the district leader for his years of service.

“I know and believe you put in place a great team to carry on,” said Stayer. “You left quite a legacy in your service to the district and we wish to honor you.” Stayer, the school board and staff honored Rosati with a standing ovation.

For his part, Rosati expressed his appreciation for those around him.

“Thank you for your dedication and caring for students,” said Rosati of the school board. “This school board focused on the students first and many will appreciate that they have been very well educated as they exit our schools.”

Rosati also thanked the community.

“This community has supported public education,” he said. “This is a tough time to raise taxes in these economic times but as long as I can remember this community really cares about kids and their future. By supporting public education our kids will take care of the next generation, paying it forward to their kids. And I know future generations will do the same.”

To his staff, Rosati was also very appreciative.

“I’ve worked with a wonderful staff, with true dedication,” said Rosati. “But last but not least, I leave you in good hands. (new superintendent) Dr. (Brian) Troop, (assistant superintendent) Kim (Schlemmer), (business manager) Kristee (Reichard) are all very competent and will really carry on the task of educating all students, maintaining a high level of good education and (see) that our tax dollars are spent right. They care about the whole organization.”

For additional information on EASD, visit easdpa.org. Gary P. Klinger welcomes your comments, questions and suggestions via email at klingerglobal@gmail.com.

We face financial challenges, but because of the financial forethought of district leaders, we are in a much better place then many of our neighboring districts. “

Judy Beiler Ephrata School Board

More SCHOOL BOARD, page A6

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