NASD board wants proposed tax hike cut to 2 percent
It was a lesson in Tax Hike 2.0
How low can you go with the proposed Northampton Area School District tax hike?
How about 2 percent?
In a surprise move Monday night, a majority of those on the NASD school board, led by board President David Gogel, hung tough and balked at the administration's proposed 2.68 percent tax hike, saying they want the hike to not exceed the state-mandated allowable 2.5-percent tax hike index and want the hike driven down to 2.0 percent.
The school board narrowly approved by a 5-4 vote May 5 the administration's 2014-15 proposed general fund-athletic and food services budget.
The vote had to be taken in order for the budget to be made available to the public for inspection.
Superintendent of Schools Joseph Kovalchik said he and NASD Business Administrator Terry Leh would confab and return at June's first board meeting with a budget with no more than a 2.0 percent tax hike.
"At the first board meeting in June, I must have the final budget to vote on," Leh said. Pennsylvania school districts must annually approve budgets by June 30.
"Terry [Leh] and I will come back with the 2 [percent tax hike]. We will take the money from our fund balance," Kovalchik said.
"If you want to make more program cuts, we can look at that. We don't, as an administrative team, support that," said Kovalchik.
Leh told The Press after the May 5 meeting that approximately $355,000 will be taken from the NASD unassigned reserve fund of approximately $7,012,461, reducing it to approximately $6,650,000 for the 2014-15 school year budget.
After the meeting and in an email to Northampton Press, Leh said the hike would actually be 1.99 percent, equal to a .95 millage increase. The NASD tax rate is 47.71 mills. Based on the district average assessment of $57,503.79, a property owner pays on average $2,743.50 annually.
With the 1.99 percent hike, millage would increase from 47.71 mills to 48.66 mills, or from $2,743.50 to $2,798.13, for an increase of $54.63 yearly, $4.55 monthly and $1.05 weekly .
While no formal vote was taken, two straw votes of board members were taken to give direction to Kovalchik and Leh.
Board members, in addition to Gogel, who said they'd only support a budget with a 2 percent increase include Darin Arthofer, Dr. Michael Baird, Roy Maranki and Jean Rundle.
Board members who said they favored a 2.68 percent or 2.47 percent increase include board Vice President Jennifer Miller, Chuck Frantz, Chuck Longacre and Judy Odenwelder.
Voting in favor of the proposed budget were: Miller, Frantz, Longacre, Odenwelder and Rundle.
Voting against the proposed budget were Gogel, Arthofer, Baird and Maranki.
Proposed for 2014-15 is a $91,698,148 general fund budget, $2,381,657 food services fund and $173,569 athletic fund.
The main change expected when the administration presents the final istration presents the final budget at 6:30 p.m. June 9 is expected to be on the revenue side of the budget, with the unassigned funds used to reduce the tax hike.
Arthofer asked what the percentage is of NASD's fund balance. PDE recommends an unassigned fund balance of 5-8 percent.
Leh said NASD's unassigned fund balance is 7.65 percent. Removing the $355,000 would reduce it to 7.3 percent, Leh said.
Gogel introduced the budget discussion 6:40 p.m., soon after the start of the May 5 meeting.
"As you know, it's been a very hard winter. So, I think we can make it a little easier on our constituents. We still have to live within our means," he said. "One thing for sure, I don't want to vote for an increase above our index. That's a no-no. The state has set our index and we can't go over that."
The Pennsylvania Department of Education does allow NASD an index of 2.5 percent for a tax hike. The district may raise taxes 2.5 percent, but no more without an exception.
The NASD school board voted for the administration to apply for a PDE exception of up to $691,045, which it received.
NASD is in the midst of an $80.7-million middle school and secondary campus renovation project.
Kovalchik said that 37 mills, or $400,000, in the 2014-15 budget accounts for the Northampton Area Middle School and Campus Renovation Project.
"If you take that $400,000 away, then you're down below 2.0, and it's a good thing," he said. "For 25 years, you've been talking about building that building. That's the impact that it is having."
Longacre reasoned that the difference between the 2.68 percent and 2.47 percent tax hikes only amounted to $5.75 annually for the average district homeowner.
"We're walking a fine line. By just cutting a couple of dollars you're setting up for a major catastrophe," Frantz said.
Miller argued that dipping into the unassigned fund balance could harm NASD's credit rating.
"Any use of that fund balance now is irresponsible," Miller said.
Bond refinancing netted a $262,620.50 windfall. Not having to pay for bond insurance resulted in an additional $46,350 savings.
Kovalchik and Leh have pointed out that using less and less of the unassigned fund balance boosted and helped maintain NASD's exemplary Moody's Aa3 credit rating.
"They [PFM, district financial advisor] made comments that we should maintain our fund balance. Any use of the fund balance could affect our rating and cost," Leh said.
"They [PFM] don't want to see a decrease [in the unassigned fund balance]. That will affect us. They [Moody's] could decrease our rating," Leh said.
"And when I start the next budget, I'm that far behind," Leh added.
"I would like to see it come down," Rundle said of the proposed 2.68 percent hike. "I would like to reduce the burden on our constituents."
A set-aside amount of $105,000 to be added to the $200,000 contingency fund will remain, bringing the contingency fund to about $305,000 for the 2014-15 school year budget.
"Everything is more costly. There are more unknowns," said Odenwelder.
The contingency fund could be used for teacher hires should kindergarten enrollment spike over summer for the fall 2014 term, for summer remediation classes for students who need to retake the Keystone exams and for special education students. The PDE mandates remediation for students who must retake Keystones if they don't pass. Teachers might have to provide remediation during summer.
The contingency fund might also be needed to pay for parking lot repairs at George Wolf Elementary School, Bath, where a sinkhole, which opened up in February, is being repaired at a yet-to-be determined cost.