State College

State College Area School District could approve tax increase lower than Act 1 index

The State College Area School District already has vowed to limit its 2014-15 tax increase to the inflation-based Act 1 index, but it could be even smaller.

The district administration is recommending a 1.95 percent tax increase for next year, down from 2.1 percent, which would represent its second-lowest tax increase in more than 10 years, Business Administrator Randy Brown said at the board meeting last week. A proposed final budget is not expected to be approved until at least late April.

“Reasoning for this refined tax increase comes from a further review of revenue and expense projections as well as meeting the district goal of limiting a tax increase while generating revenue to provide resources for the budget,” Brown said.

He said the tax increase would represent about $54 per year for the average homeowner.

The budget includes an unassigned fund balance of less than 8 percent, which is within the state Department of Education’s requirements for a district of its size, he said.

Expenses are projected to be close to the 2013-14 budget with the primary exception being a lower health care cost because of changes in plan coverage, Brown said. The health care savings could generate as much as an additional $400,000 to transfer to the capital reserve budget.

The tax increase also would not be affected by the potential additional increase, which would be generated from the possibility of a successful high school project referendum. That possible tax increase to cover $85 million in referendum debt would not be phased in until 2015-16, even if the referendum passes May 20, Brown said.

Though the recommended tax increase is smaller than it could have been, board member Ann McGlaughlin said the district still must work to communicate the need to the community to show it is being fiscally responsible.

“Even though 1.95 percent is less than 2.1, which is less than it has been in other years, still the communicating of that and the trying to help the community understand where we are, I just think that’s a big task,” she said.

Board member Scott Fozard added that he is torn over the possibility of having the tax increase below the Act 1 index, which is used to determine the maximum tax increases for each tax the school district levies. He said the difference between 1.95 percent and 2.1 percent represents a $120,000 loss in revenue and, with rising costs, he doesn’t want to lose those funds.

Fozard added that he doesn’t want residents to think the district is overtaxing them, but the lost revenue would add up to more than $1 million over 10 years.

No final decisions have been made and the district will continue to refine its projections before it comes up with a final budget, Superintendent Bob O’Donnell said.

“As each month passes, we know more, we’re more accurate,” he said.