Update May 29, 2020
Below is the 2020-2021 Final Budget form PDE-2028 for review. The school board will vote on this budget at the June 18, 2020 board meeting.
Update May 22, 2020
At the May 21, 2020 School Board of Directors Meeting, Chief Operating Officer Donna Robbins presented on the Proposed 2020-2021 Final Budget showing a 0% tax increase and a 1.5% tax increase.
May 21 Presentation Proposed 2020-2021 Final Budget
May 14, 2020 School Board Work Session
Dr. Felty’s Introduction to the Proposed 2020-2021 District Budget
Manheim Township School District School Board Work Session
May 14, 2020
Remarks by Dr. Felty:
Before Donna begins to share information this evening about our proposed budget for the 2020-2021 school year, I wanted to take a moment to share with you my thoughts and concerns as we plan to address our financial needs moving into the next school year. My introduction to our budget presentation this evening serves as a summary of our current situation in planning for this budget.
As you know, our budget presentations from this past January through March did not show the significant financial deficits that we are facing at this time. The largest impact to our school district is our revenue budget – this hit us especially hard since 78% of our budgeted expenditures are paid for with local dollars. Our deficit grew significantly over the past several weeks due to the implications of COVID-19. Prior to March 13, 2020, our deficit was $3.1 million dollars; it then jumped to $7.6 million dollars. Through extremely difficult expenditure modifications, which I will discuss in a few moments, our deficit has been decreased; however, it is still significant.
Due to the negative financial implications of COVID-19, our district is projected to lose approximately $618k in earned income taxes and interest earnings for this fiscal year (2019-2020). And for the upcoming 2020-2021 fiscal year, our district anticipates losing $3.9 million dollars in real estate/interim, earned income taxes, transfer taxes, and investment earnings. Because we are so heavily reliant on local revenue to financially support our district, these significant financial hits are devastating on the district budget.
Due to the current sizable difference between our expenditures and revenues, we are projecting the need to use a significant portion of our fund balance to help balance the 2020-2021 budget. At this time, our general fund balance is a little less than $15M, but as you know, approximately half of that is committed to areas in which we need to save for future expenditures such as PSERS, medical insurance, and the upkeep of our facilities. The portion that is not committed currently stands at $8 million dollars or 8% of our expenditures. I specifically want to emphasize this fact — we do NOT have $15M to help balance the budget. Using our fund balance to address our deficit is troubling due to the amount we need and our inability to build it back up. The use of fund balance is intended for one-time expenditures, to phase in upcoming known increases in expenditures (such as PSERS), and to save for unanticipated expenditures (such as employee medical claims); it is not prudent to use these dollars to balance district’s budgets. While we hope this is a one-time draw against our fund balance, financial experts continue to share concerns about school funding for several years to come. The financial troubles of school districts could continue beyond one year which will cause us to need to “dip into” our fund balance again during the following school year – for 2021-2022. As you can see, we could easily be out of any and all of our fund balance in a short amount of time if this continues.
Given our situation, we are looking to apply ANY savings derived in 2019-2020 due to the shut down towards the 2020-2021 budget in order to minimize the impact to our fund balance. We are also looking at other additional measures to address our $7.6M deficit, and recognize that these measures need to be substantial in nature in order to address a deficit this large. Given this need, we will be implementing expenditure delays, salary/wage freezes, and savings accrued through attrition and hiring freezes, to retain our fiscal health.
Along these lines, through the continued efforts of many members of our staff, especially our Leadership Team, we have been able to implement these key expenditure modifications, and several others, which have allowed us to cut $2.7M from our deficit. Therefore, our current deficit is now at $4.9M (given a 0% tax increase which we will be recommending to you this evening for consideration). While this deficit number is definitely higher than any of us want to see, we are very pleased to be able to cut $2.7M from our deficit through some very substantial expenditure modifications. As noted earlier, one of those very important and highly beneficial expenditure modifications involve the salary/wage freezes offered by several groups of our employees. I MUST take this opportunity to express my sincere gratitude to those individuals who have willingly offered to take a salary freeze to help our district. You will see those groups of individuals listed on our agenda this evening since you will be voting on their salary/wage freezes at next week’s Board Meeting. The related documents associated with these salary freezes outline the cost savings measures. For some individuals, their contracts have been altered to save additional monies. Overall, these employees have recognized our need to address the significant budget deficit, and know the limitations of our fund balance to help the situation. Giving back to the district and our larger Manheim Township community in this incredible way is so honorable, and so greatly appreciated.
And just as our school district is struggling right now with a growing deficit due to the significant loss of local and state revenue, many of our families are hurting as well. The unemployment rate in Lancaster County has grown to 19.2%, and I have spoken to families who have been personally impacted by the pandemic. We have families who have lost a loved one to COVID-19. We have parents who have experienced the loss of employment and are struggling to make ends meet. We have high school students who are working part-time at grocery stores and other businesses deemed Essential by the Governor in order to help support their family.
We believe our local community needs us to refrain from increasing real estate taxes for next year’s budget. However, our school district desperately needs this local revenue to address the significant deficit we are experiencing due to the pandemic. Given this conundrum, and our efforts to operate in both alignment and compassion with our local community, our administration is recommending a 0% tax increase for this upcoming school year. As I shared earlier, we will continue to have a significant deficit with planning for a 0% tax increase; however, we feel this approach is the most appropriate route to go at this time for our Manheim Township community.
At this point, it is important to note that every school district is in a different yet difficult financial situation at this time. Each district is proposing budgets in alignment with their individual needs and the local community. Therefore, decisions about budget increases, decreases, or cost-savings strategies will naturally (and appropriately) differ between districts –- we are each doing what is best and advantageous for our local communities, our families, and our districts.
We are certainly open to hearing your ideas regarding our proposal for a 0% tax increase, especially once you hear the details from Donna’s detailed budget presentation this evening. Donna will be sharing financial information regarding the implications of a 0% tax increase, a 1.0% tax increase, a 1.5% tax increase, a 2.0% tax increase, a 2.6% increase (which is our base index), and a 3.08% tax increase (which includes our exceptions). Once Donna has completed the presentation, we’ll move forward with a dialogue about your thoughts regarding increasing real estate taxes for our proposed budget for the 2020-2021 school year. You will need to vote next Thursday evening on this proposed budget. And if necessary, it can be altered by the date of the vote for the final budget, which is on Thursday, June 18.
Proposed Final 2020-2021 General Fund Budget Presentation