State Budget Update
State budget discussions are underway and negotiators are putting together the framework of a new budget. The inclusion of mandatory backend referendum for school districts' property tax increases is being considered as part of a final budget agreement. The passage of this legislation would have a drastic impact, not only on Manheim Central, but also on other districts across the state.
Imposing this mandatory referendum requirement on school districts would prevent them from raising property taxes even up to a maximum limit without the approval of voters. It would also preclude them from seeking exceptions to secure resources to pay for increases in major state mandated cost drivers beyond their control such as PSERS pension contributions, special education programs, and charter school tuition payments.
We encourage you to stay informed about the state budget process and how it may affect your local school district and family. You may also choose to reach out to your local legislators to voice your concerns over the budget.
Recently, the Manheim Central School Board authorized our administration to send a letter to State Representative, Mindy Fee, and State Senator, Ryan Aument, to voice our concern over the proposed referendum. Below is a link to that letter:
Why a referendum, such as SB 909, is bad for Manheim Central and other PA school districts
Property tax limits are already in place. Act 1 already imposes a number of restrictions on the ability of school districts to raise taxes at the local level.
Act 1 sets a maximum base index that caps the percentage each district can raise their millage rate. It also allows districts to apply for exceptions for state mandated costs that are out of their control, such as pensions, special education, and charter school tuition. Statewide, less than 20% of districts exceeded the base index by using exceptions.
Since the inception of Act 1, Manheim Central has never used Act 1 exceptions, even though those state mandated costs are spiraling out of control. In fact, Manheim Central’s tax increase has been under the Act 1 index percentage for 7 out of the last 10 years.
Pennsylvania ranks among the bottom 20% of states in the US in the percentage of total education spending they provide to districts. This is one of the reasons districts are forced to use a higher percentage of local funds.
School Districts receive funding from three sources; local, state and federal. Statewide, Pennsylvania’s state portion of those revenue sources is only slightly over 36%. In 2012, Pennsylvania ranked the 44th lowest out of 50 states. Pennsylvania's basic education and special education funding has been basically flat for the last several years.
In 2014-15, Manheim Central received only 27.5% of its revenue from state sources. MC relies on local property tax revenue and other local sources to fund nearly 69% of our budget.
State mandates such as pensions, special education, and charter school tuition are the primary drivers of increased expenditures in districts across the state.
Raising revenue to the Act 1 index rate, statewide, would not even cover 50% of the increase in PSERS pensions and charter school costs each year. Without the Act 1 index, school districts would be forced to cut their way to a balanced budget—meaning $500 million in educational programs and services for students would be on the chopping block just to maintain status quo and fund these rising state mandated costs.
Likewise, at Manheim Central, an Act 1 percentage increase for the 2016-2017 budget year would not even cover the projected increases in PSERS pensions and charter school tuitions alone. Eventually other programs will have to be cut to pay for those costs.
The vast majority of referenda have failed.
Since 2006, there have been 16 referenda by school districts under Act 1 and the Local Government Unit Debt Act, and only 2 were successful. The remaining referenda were defeated by mostly lopsided margins, showing that the public is not likely to approve such questions and demonstrating for school boards the futility of the referendum as a mechanism to obtain the resources they need to provide a quality education.
When referenda fails, schools will be left with no choice but to cut programs valued by the students and the communities they serve.
School districts not able to cover the increase in state mandated costs, and unable to raise local property taxes, will be forced to begin cutting non-mandated programs, activities and services such as art, athletics, agriculture, career and technology centers, music, STEM initiatives, theater, band, foreign languages, family and consumer sciences, student activities, kindergarten and transportation services.