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Local School District Faces Budget Deficit, Might Raise Taxes

The Tuscarora School District is bracing for a projected $1.3 million deficit next school year.

MERCERSBURG, Pa. - Nobody likes to hear that their taxes might be going up, but that is exactly what might happen in the Tuscarora School District where administrators are bracing for a projected $1.3 million deficit next school year.

"I don’t think we need to raise the taxes that much because it would affect us, the small business owners,” said small business owner Ed Stumbaugh, who owns the restaurant Just In Time in Mercersburg.

Tuscarora School District’s Superintendent Charles Prijatelj says the main reason why the district is in this mess is because Pennsylvania’s pension program, Public School Employees Retirement System, has been in some financial trouble as well.

The state is dealing with a projected $40 billion shortfall, according to Prijatelj. To make up for the losses in the pension fund, the state is increasing the amount of money districts have to put into the retirement system.

"We're going to have to make some tough choices to ensure the vitality of the district,” said Prijatelj.

The Public School Employees Retirement System requires school districts to contribute a percentage of their payroll to Pennsylvania’s pension program. Right now, the requirement sits at about 16 percent. Next year, the state is requiring districts to put in about 21 percent.

That is where Tuscarora's deficit comes in. In order to give more of their payroll to the state, Prijatelj says they will need to hand over about $1.3 million dollars that they cannot afford.

"We do have a [Public School Employees Retirement System] reserve, but if we do not take action now to ensure that we have the appropriate funds coming in, we're looking at the fact that our fund balance and our reserve will be chewed up in two years,” said Prijatelj.

So how will the district afford it? Mainly through taxes, says Prijatelj. To make up for the total deficit, administrators say property taxes would have to increase by about 7 to 8 percent.

"These increases in the retirement system are putting such a weight on our budget that we're going to have to raise taxes, or look at alternative ways to make the budget balanced,” said Prijatelj.

Currently, Pennsylvania only allows school districts to increase taxes by a maximum of 2.7 mills, but the school needs an increase of more like 8.7 mills, or in other words, a 7 to 8 percent increase in taxes, in order to dig themselves out of deficit.

That is why the district has applied for an exception that might let them raise taxes above what is typically allowed.

In three years, school districts will face even more trouble. They will be expected to give 30 percent of their payroll to the state pension program by that time.

The Tuscarora Chamber of Commerce declined to comment, but they will have a meeting with the school district on February 19 to discuss the effects of a potential tax increase. The district is encouraging residents to share their suggestions at that meeting.

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