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Allentown SD proposes 8.53% tax increase

By Stephen Althouse, WFMZ.com Reporter, news@wfmz.com
Published On: May 17 2013 01:03:54 PM CDT
ALLENTOWN, Pa. -

After hours of discussion by the Finance Committee-of-the-Whole Meeting of the Allentown School Directors Thursday night this much is certain: The Allentown School District is flat broke.

By a 5-3 vote the board approved a proposed 2013-2014 final budget that includes a massive 8.53 percent tax increase on homeowners and tapping into the district's savings by nearly $9 million.

It also included an amendment that will restore elementary art programs by adding five elementary school art teachers and also two elementary school principals back into the district.

Directors Julie Ambrose, Ce Ce Gerlach and David Zimmerman dissented. Director Joanne Jackson was not in attendance.

The average cost to homeowners in the city will be $150.37 per year. The additional positions will be paid for through a combination of using some of the district’s fund balance and staff retirements, according to ASD Chief Financial Officer Jack Clark.

The proposed budget will now appear on the May 23rd full board agenda for approval. The district has just a shade over six week before it must produce a final 2013-2014 budget by June 30th.

The proposed budget passed Thursday night had several assumptions made by the administration of what Superintendent C. Russell Mayo termed as “moving parts.”

It ascertained that basic education subsidies would be restored to 2012-2013 levels and that the district’s Accountability Block Grant funding would be restored to a level amount.

In addition is also counted on receiving an additional $1.3 million in Pennsylvania “student-focused supplement” funding and assumed a roughly $1.8 million state pension reimbursement shortfall.

The news gets worse if estimations made by the administration of Mayo and Clark actually come to pass.

Clark presented what Mayo called a “bleak” situation where the district continues to operate in the red for the next five years, draining the district’s fund to zero by Fiscal Year 2015 and even assuming massive tax increases of 8.53 percent annually on homeowners until the district finally hit the black in revenues and expenses in 2018, but still carrying a $14.1 million cumulative deficit.

“The picture doesn’t look the best,” commented Clark.

“We shouldn’t be assuming that our local taxpayers can pay over eight percent annually increase in taxes in our projections out five years,” Ambrose said to Mayo during the board’s comment session.

“We’re projecting that way but we’re not personally assuming that,” said Mayo.

“I think the 8.5 percent increase annually demonstrates the gravity of the situation,” said Director Scott Armstrong in rebuking Ambrose. “Because it is a totally unrealistic expectation that any board would raise taxes 8.5 percent and the public would stay here to tolerate it.”

Mayo also noted that the projects were based on flat funding from the state, trends in salary costs and trends in pension fund hikes. In addition ASD’s projections assume scenarios that may improve or worsen.

But recent history of the district’s tale of woe is not subjective, but fact. Mayo noted during a presentation that city taxpayers have been hit with three substantial and consecutive tax increases since Fiscal Year ’11 of 6.17, 5.46 and 2.6 percent respectively.

During that same time period the district has also cut a staggering total of 417 jobs, with a proposal, prior to Thursday night’s meeting of another 167 employees getting pink slips in the 2013-2014 budget even with another even larger proposed tax hike potentially looming.

Mayo said that 69 percent of the school’s budget is tied up in personnel costs.

“We are at a crossroads in our history,” Mayo said Thursday night, echoing sentiments he has made throughout ASD’s budget season.