Southmoreland School Board makes partial payments as Pennsylvania budget impasse drags on

The impasse with the state budget led to two actions by Southmoreland School District directors.

The board voted unanimously Thursday to pay its portion of the quarterly payment due to the Public School Employees' Retirement System for the period ending June 30.

The board voted unanimously to pay what it owes for charter school tuition, but not the portion of the payment that would be covered by state subsidies.

Dealing with the retirement system, Solicitor David Petonic explained there were three options.

The board could vote to pay its portion, as well as the money that would come from the state to be sent to PSERS.

Before June 30, 1995, the state and the school district sent its portion directly to PSERS. A change in regulations that year made the state send the money to districts for their contributions to PSERS, which must be sent to the retirement system within five days upon receipt.

The Southmoreland School Board could vote to withhold any payment.

According to Petonic, that option was recommended by the solicitor of the Pennsylvania School Boards Association. Petonic said he opposes such a move.

“If we didn't send in our share … (that) deprives the already-underfunded PSERS pension retirement fund of the ability to invest those funds and make money to pay defined pension benefits to our retirees and retirees throughout the state,” Petonic said.

Petonic said literature recently sent to each of the state's districts from the retirement system said such a move could result in a 6 percent interest penalty to the districts.

Then there was the option the board chose, which was to pay the net employers' share. That was the option recommended by Petonic.

Business Manager James Marnell said after the meeting that the district would owe about $600,000 if the state portion is included. Minus state money, the district's payment will be less than half of that.

The budget impasse has forced a number of districts to take actions such as getting revenue anticipation notes to be able to pay bills in the absence of money from the state.

Superintendent John Molnar said Southmoreland is not at that point.

“Our fund balance is such that we don't anticipate having to do that for some time yet,” he said.

Marnell added that if the state remains without a budget when the next payment to PSERS is due in December, the district will be able to afford its portion of the payment.

In regard to the payment to the charter schools, the board will pay what it owes for the tuition, a figure Marnell explained is about $400 of every $1,000 that is owed. The rest of the money would come from state subsidies, which have not been received.

“School districts are being billed for tuition by charter schools,” Petonic said. “There is no state budget, so you don't know for sure what the state is going to allocate in the way of subsidies.”

He said if the district was to make full payments without knowing how much was to be received from the state this could cause the potential problem of “having to reopen the budget.”

Paul Paterra is a staff editor for Trib Total Media. He can be reached at 724-887-6101 or ppaterra@tribweb.com.