The School Tax Vise

Taxes soar, but still suburban districts struggle. And the problem's worsening.

 

Jessica Parks and Chris Palmer, Inquirer Staff Writers

Posted: Sunday, July 21, 2013, 3:01 AM

Struggling to pay her taxes and save her Bucks County home, 80-year-old Catherine Gudknecht has worked part time for 17 years on an assembly line. This year, she is making $8.05 an hour."I really don't know where I'm going to go if I have to give my house up," she told the Bristol Township School Board last month at a public meeting, her eyes welling with tears. "I try to do it on my own, but it's getting hard."In the last 10 years, the school portion of the annual tax bill on her Levittown home has increased about $1,000, to more than $3,300. Despite her emotional plea, taxes went up again July 1.But Bristol's school-tax increase is modest compared with those of other districts in Montgomery, Bucks, Chester and Delaware Counties.

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According to an Inquirer analysis, school taxes in those four counties increased more than 40 percent in the last decade, in some cases double and triple the rate of inflation.On average, the increases have added about $1,200 to homeowners' tax bills. Even with those increases, however, districts continually struggle. Many confront budget deficits in the millions, year after year, necessitating cuts and adjustments to keep the districts afloat.Unlike New Jersey, where overall property levies have risen even faster, school millages in Pennsylvania constitute a heftier share of the annual property-tax bill. And they are one of the only revenue streams districts can use to keep up with cost increases.In Upper Dublin, where the nationally ranked $86 million-a-year school system is the pride of the township and a major real estate attraction, property taxes have risen 79 percent over the last decade.Yet the district is perpetually treading water in budgeting, most recently facing a $7.3 million deficit for 2013-14.Rather than cut into the district's elite academic offerings, the school board raised taxes 3 percent and resorted to layoffs, furloughs, demotions, early retirements, and a $2.5 million withdrawal from the reserve fund. By this time next year, the district says, it expects to have only $8,556 left in reserve."For me, as long as I have a school-age daughter, it's worth it," said Sheryl Nutis, whose school-tax bill has jumped from $3,663 to $6,521 in the last decade. "But I have relatives who want to move out of Upper Dublin because their kids are grown, and it keeps going up." Nowhere in the counties have bills increased more robustly than in Delaware County's Ridley School District. Millages there have almost doubled since the 2003-04 school year, adding about $1,900 to the typical tax bill. Despite the increases, a $2.5 million deficit has forced the district to drop 12 teaching positions.In Chester County's Octorara School District, where tax-exempt horse farms and other agricultural properties skew the tax burden, bills have risen almost $1,700.These districts' budget woes may pale in comparison with Philadelphia's, where officials begged a $304 million reprieve from Harrisburg and sent layoff notices to 3,859 employees, or those of the Chester-Upland School District, which has been taken over by the state. But many districts face intractable financial realities: Costs are rising, state and federal funding is not."We have no new revenue to go to, so that means property taxes," said Jay Himes, executive director of the Pennsylvania Association of School Business Officials. In all, $3.9 billion in school real estate levies were collected in the four counties for fiscal 2010-11, compared with $2.3 billion 10 years before.Himes said a large chunk of school district expenses are fixed to personnel costs."We have a revenue problem, and we have an expenses problem," he added. Chief among the troublesome expenses, he said, are pension obligations.Because of a long-term deficit in the underfunded pension plan, district contributions to the Public School Employees Retirement System will rise from 12.36 percent to 16.93 percent next year and 21.31 percent the following year. Democrats have criticized Gov. Corbett in recent years for slashing education funding by $1 billion. Corbett has said the end of a federal stimulus program caused the downturn in spending. The legislature did approve a 2.27 percent increase in basic education funding for next year's budget.But in Upper Dublin, state funding accounts for only 14 percent of the budget, federal funding less than 1 percent.That leaves 85 percent of the burden on local revenue, where state law limits the amount school boards can raise their millage each year (for 2013-14 the base rate was 1.7 percent). "It's sort of a perfect storm. The pension problem, health-care costs. It makes it very difficult, there's nowhere to go," said Michael Paston, a former Upper Dublin School Board president. That budget storm has been raging with particular ferocity in the Ridley district, where millage rates have nearly doubled in the last decade. Superintendent Lee Ann Wentzel said the district was sensitive to concerns about the tax rate. The district received permission to exceed the state cap and raise taxes 2.2 percent next year, she said, but the board approved only a 2 percent increase.The district tried to take a multipronged approach to close its $2.5 million budget gap for next year, Wentzel said, and that included eliminating 12 teaching positions and shuffling middle-school schedules. Still, Wentzel, like her counterparts in neighboring districts, fears that these cut-and-paste budget solutions will not work long term."We've been very creative," she said, "but how much longer can we sustain this? I'm not sure, and that's a little frightening."While Bristol Township avoided teacher cuts for next year, the school board did remove a handful of classroom aides, cut funding for extracurricular activities, took $3.2 million from its fund balance, and raised taxes 2.2 percent to close its $9 million budget gap.In Upper Dublin, school boards have struggled for years with what Paston calls "a culture of crisis management." "Decisions that they know will need to happen get pushed off as long as possible," he said.The roots of the district's current crisis go back several years to when, under Paston's leadership, the board gave teachers a large salary increase. Paston said it was long overdue and was needed to bring Upper Dublin teachers into line with neighboring districts.Now, three-quarters of the district's budget is tied up in "the inescapable math" of personnel costs, Superintendent Michael J. Pladus said. The district next year is locked into a $2.5 million salary increase and a 4.6 percent pension increase that brings the average annual teacher cost to more than $98,000 - not including medical benefits, which Pladus said can cost as much as $15,000 per teacher.Upper Dublin's salaries are now comparable to those in neighboring districts in Montgomery County, but those are eight of the state's 15 highest-paying districts. With the teacher and support-staff contracts expiring in June 2014, Pladus is optimistic that the district will have more room to maneuver in next year's budget.The outcome of those negotiations could determine whether Upper Dublin survives with more patchwork solutions, or has to resort to more drastic measures.In the neighboring Wissahickon School District, officials hope that a school-closing and realignment plan can help stabilize long-term funding. But it's also breaking parents' hearts and sowing acrimony among residents. Elsewhere, districts have looked at outsourcing food service, transportation, and support-staff jobs, or cutting entire programs."The things that are incredibly valuable to the holistic education - arts, music, sports - will all but cease to exist," said Bristol Superintendent Samuel Lee, adding that those are the things students want most."We have to decide what we want for our children and how much we can afford," he added.For taxpayers such as Gudknecht, however, affording anything more would represent a major challenge."Every penny I get has to go toward school taxes," she said last month. "There's no other way."

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