Great Valley School District Might Not Raise Taxes

Back in January, Great Valley School District applied for the option to raise taxes beyond the 1.7-percent cap imposed by state law for the 2013-14 school year. At Monday night's school board meeting, district leaders discussed the possibility of not raising taxes at all.

What changed?

According to a post on the district website, health care costs are lower than expected and revenue projections are looking up. 

[GVSD business director Charles Linderman] reported that trends are showing signs of improvement in the areas of property sales and tax collections. Additionally, health care costs were lower than projected. The district expects to see about $2 million in combined savings and additional revenue that will transfer to the district’s reserve fund to offset future tax increases.

And the Uptown Worthington development's long-awaited progress is also expected to bear fruit, with the majority of commercial space already leased:

Linderman reported that the benefits from the first apartment complex on the Worthington site could be seen in the fall of the 2014-2015 school year. “When that site is complete, we will receive about $6 million in additional tax revenue. While that development doesn’t directly impact us now, it does impact our projections in a positive way.”

Expenditures for 2013-2014 total $80,700,000, with a required millage of 19.89. That is a 1.5% increase from the current year’s millage of 19.59. That increase in the budget can be attributed to health care and PSERS costs.

“Based on the revised projections and the outlook for the future, we could go lower—even to zero—if the Board would desire,” Lonoconus said, according to the district website.

One of the questions that emerged from the discussion was whether, in five-year projections, to keep the tax increase at zero for 2013-14 and then jump to the 1.7 percent cap in out years, or to more evenly distribute the increase over all five years.

The board's next meeting is scheduled for May 20, and final budget adoption is scheduled for June 3. 

The full statement from the school district regarding the possibility of no tax increase is below:

School Board Considers No Tax Increase for 2013-2014

At its meeting on May 13, the Great Valley School District Board of School Directors heard a budget presentation that included a review of previously discussed areas for the development of the 2013-2014 school district budget. Superintendent Alan Lonoconus reiterated the impact of expected increases in health care and the required employer contribution rate to PSERS. However, for the first time in budget presentations, Lonoconus also presented an optimistic view of anticipated revenue.

 

School Business Administrator Charles Linderman began the budget presentation by reviewing some of the watch areas in the current year budget. He reported that trends are showing signs of improvement in the areas of property sales and tax collections. Additionally, health care costs were lower than projected. The district expects to see about $2 million in combined savings and additional revenue that will transfer to the district’s reserve fund to offset future tax increases. 

Additionally, Linderman reported that he attended a Township meeting in early May that included an update on the Uptown Worthington site. According to Linderman, site developer Brian O’Neill reported that Uptown Worthington developments are progressing, with the majority of commercial space sold out. Linderman reported that the benefits from the first apartment complex on the Worthington site could be seen in the fall of the 2014-2015 school year. “When that site is complete, we will receive about $6 million in additional tax revenue. While that development doesn’t directly impact us now, it does impact our projections in a positive way.”

Expenditures for 2013-2014 total $80,700,000, with a required millage of 19.89. That is a1.5% increase from the current year’s millage of 19.59. That increase in the budget can be attributed to health care and PSERS costs.

“Based on the revised projections and the outlook for the future, we could go lower – even to zero – if the Board would desire,” Lonoconus said.

“We’ve got the promise of strong economic development and real estate and it’s continuing,” said Board member Andy Daga.  “We do have PSERS on the horizon…and the reciprocal effect of new construction on enrollment … but if I listen to projections…we’re looking at a whole new ball game in terms of revenue. Is it possible to hold this (budget) at zero?”

Board member Pat Gillespie echoed Daga’s sentiment. “With everything looking more positive, I was hoping to see that number (for next year) come down,” she said. 

Lonoconus was prepared to address the Board’s questions about a zero percent increase for 2013-2014 by presenting a revised five year plan: one that shows a zero percent increase for 2013-2014 and an increase of 1.7% for subsequent years.  “With the assumptions we have – and being as conservative as we’ve been the last few years – we feel confident in these projections,” he said.  “As you know from past years, even if I budget at 99% accuracy, I’m still going to have about $800,000 left over which then each year will be added back into there (the five-year plan).”

Board member Ted Leisenring questioned the revised five-year plan.

“I’m curious why you put this slide together and you show a zero increase in 13-14 and then it jumps back up to 1.7%. Why wouldn’t you flatten it out? Why are we focusing on a one-year reduction to zero?”

Lonconus referred to previous five-year plans that use 1.7% increases in years following 2013-14, but noted that the presented revision takes the 13-14 budget down to reflect no tax increase.

“You could also do a scenario where you come up with the same result by flattening it out,” said Leisenring. “Instead of one year, why not soften the pain out in the future? In other words, lower the out years to 1.5%, with some increase this year and then lower the out years? We should plan for the future with a steady, gradual line.”

In response to Leisenring’s comments, Board member Stephanie Gunderson spoke of recent public criticism that accuses the Board of taxing the public too much in years when it doesn’t really need it. Board member Jennifer Armstrong echoed Gunderson’s statement.

“I think we’ve heard from taxpayers that if we can hold to a zero in a year, that we should hold to zero in a year,” Armstrong said. “We may be able to give our taxpayers some more relief in the longer term. I’m not sure there’s a reason we wouldn’t give our taxpayers relief in a year when we can actually give them relief.”

“If there’s a year  – like this year  – where our administrators are telling us, based on what our revenues are projected to be and taking a look down the road in the outlying years, we can still relieve our taxpayers … what a wonderful thing that would be,” said Board member Ellen Behrle. "I’m thrilled that this looks like it can be a possibility.”

“We build a budget based on all the scenarios of what we needed. There’s no reason to add more in … if it’s not needed,” said Board president Dave Barratt.

Lonoconus reiterated that the Board always has the option of raising taxes, but told the Board that he feels “very confident” that a zero percent increase for 2013-14 is possible.

“Previous projections actually showed our assessments declining over the next few years. Current projections show them remaining stagnant, but without decline,” said Linderman. “The only real unknown remains the Governor’s budget.”

“Two or three years out, when the Worthington complex starts to…see occupancy permits, the revenue could increase and the 1.7% future tax increases could be even smaller,” said Barratt.  “One of the reasons we might not smooth (increases) for the future is because hopefully future development will show extra revenue coming in.”

“Our expectation would be that outer years will slowly look better and better,” said Gillespie who also referenced the reduction of debt service in 2018-2019.

“That’s not a cure-all,” said Lonoconus, “but it does bring back another influx of funds for our non-committed reserves or the capital reserve.”

The School Board will continue to discuss the 2013-2014 budget until June. It is expected to vote on a final budget on June 3.