Lehigh Valley

Quakertown school directors debate big tax hike

Increase would require exception from state

QUAKERTOWN, Pa. - Facing the specter of a looming deficit, the Quakertown Community School District's board of directors approved a preliminary budget Thursday night that would hit property owners with the largest tax hike in eight years, if formally approved in June.

The 2018-2019 preliminary budget has a $3 million shortfall and includes a 4.2 percent tax hike to help close it. That increase is 1.4 percentage points higher than the Act 1 Index, which is at 2.8 percent. Using a complex formula, the Act 1 Index sets an annual property tax increase threshold for public school districts. Should a district want to exceed that amount, it must vote to use "exceptions" provided by the Pennsylvania Department of Education. The Thursday vote allows the district to pursue tax increases beyond that amount.

The additional tax hike was requested by the administration of Superintendent Bill Harner.

A 4.2 percent tax hike would increase the average tax bill by $174 annually.

A 2.8 percent increase would hike it by $116 a year.

Per the school district’s website, the current millage rate is 157.77, which amounts to a tax of $1,578 for every $10,000 of assessed property value.

Voting for the budget Thursday night were Directors Keith Micucci, Ronald Jackson, Kaylyn Mitchell, David Ochmanowicz and Jennifer Weed. Dissenting were President Steaven Klein, Vice President Austin Sedicum and Directors Dwight Anderson and Jonathan Kern.

Increase could have been higher

"This is not a budget that looks good," Sedicum said.

A 4.2 percent tax increase would generate more than $2.68 million in additional revenue. The remaining shortfall would be covered by the district's fund balance and total about $2.1 million, according to documents supplied by the district. That would leave QCSD with an estimated ending fund balance at the end of 2018-2019 of roughly $10.8 million.

The tax increase could have been higher. The district opted not to pursue full exceptions for retirement and special education costs. Had they done so, the burden on property owners would have ballooned to more than 6 percent. The district also decided to close Milford Middle School last summer and Tohickon Valley Elementary this coming June. Without those closures, the red ink would have splattered all over property owners at a $7 million threshold.

The preliminary budget features about $110.5 million in spending and revenues of $107.54 million, according to QCSD documents. The budget's fiercest cost drivers include a $1.1 million bump in special education and an $828,316 increase in healthcare costs

Big increase not popular with directors

Whether the district raises taxes by that amount when the final budget is approved in June remains to be seen. The consensus Thursday night was that directors have little appetite to raise taxes that high. Voters elected four new members to the board last November — Micucci, Mitchell, Ochmanowicz and Weed.

The board as it existed had its own philosophy and the four new members brought with them their own ideology. While dissent surrounded Thursday night's vote, it was clear based on comments made by directors that they want Harner to find a way to lower the amount.

Last year, for example, the board refused to grant the administration any exceptions. For the previous seven budget seasons, directors have forced the administration to make do with tax hikes that were either at the Act 1 Index or below, according to comments made by Jackson.

While the intention may be to reduce the tax amount below 4.2 percent, the question becomes exactly how and where Harner will manage to do so. No specifics were offered Thursday night.

Directors spoke in generalities about this desire to move toward financial austerity. For example, Mitchell said she and her committee would view the budget with an eagle eye and promised property owners that there was in fact "a long-term strategy here."

Micucci claimed the approval would "give us time" to ascertain how and where the savings or cuts would come. He added that he hoped the district didn't have to go beyond the 2.8 percent plateau.

Ochmanowicz voted for the 4.2 percent hike reluctantly, and previously told Harner to make sure he doesn't place the board in the position to raise taxes above the Act 1 Index. 

Articulating a somewhat different perspective on tax hikes was Weed, who explained that she and her husband were near the top of the tax bracket when it came to paying property taxes. Her point was that she would personally be forced to sacrifice at a much higher rate than other people in the district. She added that "I feel that public education is so important. … I care about the school district."

Dissenters offered different perspectives. Kern cautioned Mitchell in particular for voting to approve a 4.2 percent tax increase even at the preliminary stage, on the premise that once you open the door to such a high rate, it rarely if ever gets shut. Specifically he challenged Mitchell to explain exactly how she was going to practice such fiscal frugality, given that reductions can only be made in about "10 percent of the budget." The district's contractual and mandated obligations constitute about 87 percent and include salaries, health care and retirement mandates.

Given that a final budget isn't required to be produced by the district until June 30, the lack of specifics did not seem to bother many directors on a frigid February night.

"It's my hope we can get back under the Act 1 Index," said Sedicum. "The goal is not to utilize them."

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