Board scrambles to cover budget deficit
Bethel Park school board members will hold a special meeting Thursday at 7 p.m. to try to figure out solutions to an estimated $1.4 million shortfall in this year’s operating budget.
Ken Gorton, director of finance and operations for the district, said that this year’s $55 million budget took into account an increase in insurance premiums, but apparently, the estimates were low by more than $1 million.
“We estimated a significant increase and it went up beyond that,” said Gorton, who’s been with the district since July, the start of the fiscal year.
Board members will meet to discuss funding cuts and borrowing to cover the shortfall. Gorton noted that most of the costs in many school districts are people costs, and the district would have to look to cut costs through other operational expenses. However, he said that capital projects would likely be unaffected, since they came out of the district’s capital budget and not the operating budget.
Board President Sean Taylor reserved comment until after the meeting.
“I’m not sure it’s that high,” he said.
Board member Charlie Koch raised the idea of a tax increase, based on a proposal by Gorton to borrow $2 million, repayable over two years, to cover the shortfall. Koch said that if the board borrowed money to cover themselves this year, they’d have to pay it back eventually and either take money out of the budget to pay for it, or raise taxes by as much as 3.5 mills. The current millage rate in Bethel Park is 19.41, after the district raised taxes for this year by 0.91 mills.
Koch said that if the district took out a loan, it could also be paid for through a bond issue.
Gorton took over as finance and operations director after business manager Joe Iannuzzi retired last year, and Superintendent Victor Morrone resigned. The board has hired Edgar Holtz as acting superintendent while they search for a permanent replacement, but will pay Morrone his annual salary of more than $120,000 until he retires next year.
The district is hampered by the lack of a fund balance, and although it broke even financially during the 2002-2003 school year, it had a shortfall of about $250,000 from the 2001-2002 school year. The district spent down the fund balance by about $3.4 million in the 2001-2002 school year, due to a combination of overspending and decreasing revenue.
And it doesn’t look to get any better. Assessed property values were frozen throughout Allegheny County this year, and property taxes remain the biggest source of revenue for school districts in the state.
“No one has pointed the finger yet,” said Koch, who himself serves as business manager for the Chartiers Valley School District.