Penn Hills School District officials may have the opportunity to do something almost unheard of in recent years: not raise taxes.
“There will be no tax increase this year, and you can take my word for it,” board chairwoman Erin Vecchio said during a finance committee meeting Jan. 18. “People received $400 gas bills. The food is off the charts. They can’t afford (another walk).”
The board raised taxes for three consecutive school years, including a $0.5 million increase for the current budget. The tax rate is 30.5965 mills.
The previously financially troubled school district has some numbers to back up Vecchio’s statement.
Newly hired chief financial officer John Zahorchak said the district has a fund balance, or reserve fund, of $14 million. He also had about $36 million in the bank at the end of last month.
Zahorchak reported that district revenues increased $8 million in December compared to 2021 and expenses increased $5 million, leaving an estimated surplus of $3 million.
State Sen. Jay Costa, D-Forest Hills, presented the district with a $1 million grant earlier this month. That money has yet to be added to the general fund.
Administrators are leaning heavily on the district’s balanced funds policy, which states, in part, that it will keep at least 5% of its approximate $105 million operating budget in reserve, as the primary reason why it would not be need a tax increase.
“The evidence does not support a tax increase,” Zahorchak said.
The 2023-24 school year would be the third year in a row that the district’s fund balance was above its policy.
“I think it’s fantastic,” Vecchio said. “I think it shows how hard we’ve worked in the last five years. We have turned this district around. When I first came back to the board, they didn’t have enough money to pay the electric bills or anything. Now we are sitting quite a lot. It’s all because Jay Costa helped us.”
Zahorchak advised the board that financial planning for the 2023-24 school year is in its early stages. He plans to provide several budgets with different scenarios so they can make an informed decision on the final spending plan.
“I think we have the due diligence to show you what it looks like without a tax increase, and what the impact of that is compared to what it looks like in the next five years with a tax increase,” he said.
Zahorchak, a former business manager for the Plum School District, joined Penn Hills in December. She replaced business manager Eileen Navish, who retired at the end of November.
The school board was expected to adopt a resolution at its Jan. 25 meeting to keep any potential tax increases within the state’s inflation-based limit known as the Act 1 rate.
“This is a very important first step to start the budget process for the next school year,” Zahorchak said.
Law 1, passed in 2006 to provide property tax relief, sets a tax cap for school districts to cover normal inflationary costs and still pass a balanced budget.
The maximum the district could collect in taxes based on the rate is 5.7%.
An increase to the maximum would be about 1.744 mills and would increase the rate by about 32.3405 mills.
That means property owners would pay almost $32.34 in taxes for every thousand dollars of assessed value.
The district still has $2 million in federal emergency aid funds for elementary and secondary schools.
Zahorchak said the district’s preliminary budget, which is still being developed, would have a $1 million shortfall without the ESSER money.
He told the board he was confident he could cut $500,000 in spending and was exploring various options to increase revenue without a tax increase.
A preliminary budget is expected to be voted on in May. State law requires school districts to formally adopt their budgets by June 30.
Michael DiVittorio is a staff writer for Tribune-Review. Michael can be reached at 412-871-2367, [email protected] or via Twitter .