Lesser-known proposal to slash FICA reimbursement could cost schools more than $600,000 if passed by legislature
By Mike McGann, Editor, UnionvilleTimes.com
EAST MARLBOROUGH — Few were shocked by Gov. Tom Corbett’s proposal to cut state aid to public education — cuts that amount to a loss in state funding of about $478,000, according to sources in the state Senate.
What was a bit of stunner to local school district officials was a Corbett proposal to slash the matching reimbursements the state makes for Federal Insurance Contributions Act payroll taxes. If the state legislature agrees — admittedly, a very iffy proposition — it could cost the Unionville-Chadds Ford School District more than $600,000 in additional lost funding in the 2011-2012 budget year.
If that transpires, the district will be looking at a $1.1 million budget hole from the preliminary budget adopted last month. While about $250,000 can be made up by raising taxes from the planned .99% hike for Chester County residents to the state limit of 1.4%, the rest of the deficit would have to come from cuts in spending.
This fiscal hit comes as the district has had to absorb almost $1 million in lower than expected real estate and transfer taxes in the 2010-11 budget year. The district has managed to cover those losses through savings and the new budget calls for lower collections in 2011-12, so it’s likely there won’t be such a shortfall, school officials say.
The proposal from the Corbett Adminsitration would change the reimbursement rate for employees hired since 1994 to 50% or the state aid formula, whichever is lower, Unionville’s Director of Business and Operations Robert Cochran said. That change would cost the district $612,000 in reimbursements.
“This is a prelude to much deeper cuts in the future,” board member Paul Price said. “We have to expect less and less help from state of Pennsylvania.”
Although the shortfall could have been passed on directly to taxpayers had the board opted to file for its exceptions to Act 1, board members said they still don’t regret that decision.
“One might draw the conclusion that it wasn’t wise to not take the exceptions,” board member Jeff Leiser said. “But I think it was.” He noted that it would be unfair to pass higher taxes along to taxpayers already struggling with a tight economy and little in the way private-sector salary increases.
Aside from expressing frustration at the loss of revenue, various members said it continues to be a problem that local school boards are expected to submit their budget more than a month before the governor presents his — meaning district officials are forced to guess what will happen with state aid numbers.
“It certainly makes our budgeting challenging,” Finance Committee Chair Keith Knauss said.
There was a lot of that “challenging” word going around, Monday night during the Board of Education’s Finance Committee meeting.
“The most challenging thing is the timeline,” Superintendent of Schools Sharon Parker said, noting that these proposed funding changes come a month after the district had to file its proposed budget with the state Department of Education. Parker said she planned to work with district administrators and building principals to look at some of the previously reviewed spending cuts that were set aside previously, to makes up the more than $750,000 that could go missing in state funding.
The board plans an additional meeting of the Finance Committee later this month to address the funding issue. The topic is likely to be addressed at Monday’s formal Board of Education meeting at Pocopson Elementary School.