With limited options left to raise revenue, the Scranton School Board passed a preliminary budget for next year with an $18.7 million hole.
The $159 million budget has the district considering layoffs to its teaching staff, which would be effective at the end of the school year, and cuts to programs. Directors have already asked administrators to take a 4 percent pay cut and plan to ask vendors who do more than $100,000 in work with the district to give something back.
“It’s a gigantic gap,” Director Paul Duffy said at Monday night’s special meeting. “We don’t have any chance in closing it. ... We won’t solve all the problems without significant help from the commonwealth of Pennsylvania.”
The preliminary budget passed 7-1, with President Bob Sheridan voting against it. In what may be his last meeting on the board, Sheridan said he had concerns about what the budget could mean for taxpayers. Though no property tax hike is included in the preliminary budget, the board has the ability to raise taxes as much as 3.6 percent, or 4.5 mills. A mill is a $1 tax on each $1,000 of assessed value, so a resident with a property assessed at $10,000 would see taxes increase by $45 next year, if the board raised taxes by 3.6 percent. But any tax hike would do little to close the gap. Raising taxes to the maximum would only generate about $1.5 million.
The budget, which must be balanced by the end of the year, includes:
• $140.5 million in revenue and $159 million in expenses.
• An increase in expenses of $5 million compared to 2017, mainly due to increases in health insurance and state-mandated pension costs. The district plans to spend $22 million on health care this year, after budgeting $17.5 million.
• A $3.7 million reduction in salaries, thanks to retirement incentives, according to the district. Salaries and benefits account for 77 percent of the total budget.
• An increase in debt service payments from $13 million to $16.9 million, thanks to additional borrowing to balance budgets and keep the district open. Directors blamed the state’s 2015 budget impasse for requiring the district to borrow about $40 million to make a loan payment.
“I don’t want to take the whole blame with the crisis we face,” Director Bob Lesh said. “We have had partners in this, including Harrisburg. Decisions had to be made to keep doors open.”
Directors also called for fair funding from the state, noting that Scranton receives less per pupil than other similarly sized districts. Earlier this year, officials asked local lawmakers to rally for more funding on the district’s behalf.
With the board having not publicly discussed what potential programs or teaching staff could be cut, many educators filled the board room of the Administration Building on Monday night. The proposed budget includes no program cuts or layoffs of teaching staff. It also does not include savings from potential administrative salary reductions.
Superintendent Alexis Kirijan, Ed.D., has already agreed to take the cut, which will save the district about $6,300 next year.
“I don’t know how you run a school district without teachers or the support of paraprofessionals ... there is no school, there is no learning,” said Rosemary Boland, president of the Scranton Federation of Teachers. “I can’t, with my union members, make up the deficit.”
The district hopes to find health insurance savings by working with the teachers union. The two sides plan to meet today to discuss possible options.
The board has already announced plans to lay off 23 employees in the maintenance and clerical workers union, including gym and pool assistants, library clerks and hall monitors, effective July 1.
For years, the district has balanced budgets with one-time revenue sources, including borrowed money and its health care trust. Options for borrowing this year may be limited, depending on market conditions, said Gregg Sunday, chief financial officer. Unlike preliminary budgets in the past, the current spending plan includes few “wish list” items.
For 2018, the board may use $4.9 million in long-awaited state construction reimbursement money, received earlier this year after being held up for years because of incomplete paperwork from the district, to help close the gap.
Beyond the 2018 budget, the district’s general fund deficit could approach $40 million by the end of this year. The state placed the district on financial watch status this summer, the first in a series of steps that could eventually lead to state control.
“This is a starting point,” Sunday said of the spending plan. “The district needs to start somewhere.”
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