Lowering healthcare costs, offering an early retirement incentive for senior teachers and a new increased deductible medical plan were among the solutions offered during a presentation at the Pennsbury School Board meeting Thursday night.
Board member Howard Goldberg led the presentation outlining the current financial state Pennsbury School District faces starting with the revenue challenges for the 2011-12 school year and beyond. Declining revenues were a cornerstone of the presentation.
During the presentation Goldberg citied “Declining state funding – reduction in subsides, grants and reimbursements under proposed state budget could result in a $3.7 million revenue loss for Pennsbury.”
Declining assessments, reduced investment interest – from $2.8 million in 07-08 to the projected $100,000 in 2010-11 -- loss of stimulus money and reduced federal subsidies also contributed to the revenue challenges in upcoming years.
In regards to the projected revenues and expenditures, with total revenue before a potential tax increase at about $169 million and total expenditures at $173.3, the district faces a $4.28 million deficit. The fund balance appropriation stands at $2.5 million and the deficit before the allowable tax increase of 1.4 percent stands at $1.78 million – all this before the impact of collective bargaining agreement.
A three-year expenditure history showed in 2008 to 2009 an increase from $167.3 million to $169.1 million – a 1.14 percent increase. Conversely, there was a 1 percent decrease from 2009 to 2010’s figure of $167.5 million.
The current teacher’s contract under status quo keeps teachers salaries in a “frozen” state, Goldberg said.
Teacher’s packages -- including salaries, PSERS contributions, Social Security and healthcare contributions -- totaled $82, 032, 503 for the 2010-11 school year. Projected costs through the 2013-14 school year were expected to increase by $2.5 million.
The only noted decrease that Goldberg referred to was impending teacher retirements. He said the projection noted a decrease in salaries by $3.07 million taking into consideration 20 retirements a year by senior teachers -- those who make more in terms of salary.
The proposed solutions that Goldberg spoke about included the following:
- Early retirement incentive - An early retirement incentive is considered a post-employment benefit. The Government Accounting Standards Board (GASB) requires this type of benefit to be expensed in the yea that the employee becomes eligible for the benefit. Therefore, if a retirement incentive were approved for this year, there would have to be sufficient balance to cover the total cost of the incentive.
- Increased healthcare contribution - For every dollar contributed, teacher salary could only be increased cents on the dollar due to PSERS and social security and still maintain the status quo.
- New increased deductible medical plan - Could provide savings that could be used to increase salaries.
- Recover from recession in time, but when? - This would lead to greater investment earnings, increased assessments, improved state subsidies.
- Board Revenue Development Committee - Some hope (advertising, grant-writing) but nothing is certain.
- Act 1 referendum – unlikely.
- Act 1 exception – uncertainty in future years.
In regards to other districts, Goldberg posed the question: “How do other district’s do it?” He adds, “They don’t.”
Goldberg cited layoffs, staff reductions, elimination of kindergarten, cutting number of advance placement classes, and considering a four-day school week were among the cuts other districts proposed to balance their budgets.
In conclusion, Goldberg said “given the increasing costs of the teacher’s contract due to PSERS contribution and healthcare benefit expense it is not now possible to increase faculty compensation without sacrificing educational programs – even with cost savings generated by retirements.”
Goldberg said the negotiating could be improved if and when there are significant changes to the district’s healthcare plan, the Act 1 index is increased by the state and the economy improves resulting in increased revenue and state subsides.