First look at PENNCREST budget includes tax increase

Apr. 4—HAYFIELD TOWNSHIP — A presentation Tuesday on the first draft of the 2024-25 PENNCREST School District budget included two tax hike options: an increase of 3.7 percent or an increase of 7.5 percent.

Speaking for himself rather than the board as a whole, board President Bob Johnston's reaction immediately after the meeting made it clear how he felt about the more extreme option. But at the time, Johnston, who said he was "usually dead set against a tax increase," signaled his openness to a smaller hike.

"I know we've got to raise the taxes," he said, "and there's no way in hell I'm voting for a 7.5 (percent) increase."

Nearly an hour in length, the presentation outlined a projected $61.2 million in expenditures for next year — a 5.85 percent increase over the current year. Revenues, on the other hand, are only projected to increase 0.4 percent to $57.5 million.

"We're not done looking at the cuts," Johnston stressed after the meeting, saying that any cuts should not come from "stuff that affects students."

In the presentation by Business Manager Kristen Eckart, a number of points stood out.

Though the final state education funding won't be known for months, the current proposal is to distribute $200 million in Basic Education Funding (BEF) and another $872 million to address adequacy gaps across the state. The second amount was recommended by the state's Basic Education Funding Commission, which split 8-7 along partisan lines, to address what the Commonwealth Court last year ruled was the unconstitutional nature of the state education funding system.

The $1.07 billion in funding won't help PENNCREST much, however, according to Eckart. The basic education funding received from the state would be the lowest level in 10 years, she said, and at $75.25 per student would be significantly lower than the $754.78 received last year.

As for the much larger investment intended to address the statewide adequacy gap, PENNCREST can expect even less.

"We don't qualify for that," Eckart said, "so we are getting zero dollars."

Part of the issue, according to the presentation, is that the district already draws most of its funding from the state. Using tentative projections for next year, the district would receive nearly $35 million — 61 percent of its projected revenue — from state funding, another 36 percent from local sources, and about 3.4 percent from federal funding.

"We are 60 percent funded by the state," Eckart said. "Most districts are about 30."

A variety of factors are considered in weighting the district's student population and the resulting portion of the overall funding pie it receives. Factors include poverty levels, proportion of nonnative English speakers, charter school participation, population density and geographic area, and median household income. Despite being the second largest district by area, PENNCREST does not receive a bonus from the sparsity-size adjustment.

Another factor that works against the district is the consideration of current "local effort" and capacity. Here, local wealth, current property tax levels, and the level of taxes the district is capable of supporting according to state calculations are compared to levels from across the state.

While the district's median household income is about 8 percent below the statewide median, its taxation level is only about 79 percent of the state median, based on property values and household income, according to the presentation. As a result, the district's share of funds allocated through Basic Education Funding is adjusted down.

Declining enrollment also contributes to PENNCREST missing out on the proposed adequacy investments. Enrollment has declined by nearly 22 percent since the 2013-14 school year, according to Eckart.

Because districts are guaranteed minimum funding levels equal to what they were receiving prior to the implementation of the Basic Education Funding formula in 2015, the declining enrollment has not impacted state funding as much as it might have. A 2020 analysis by the Pennsylvania House Appropriations Committee reported that PENNCREST was one of 111 districts then receiving more than 200 percent of what would be considered its "fair share" under the BEF formula.

For at least one board member, a key takeaway from reviewing how the district's state funding is calculated was that it reflected poorly on the district's "local effort."

"Basically," Tim Brown said, "the state won't help us anymore until we help ourselves."

"Correct," Eckart replied.

The 62-slide presentation produced a few questions from members but little discussion as the board sets out on a process that is expected to produce a preliminary budget by the May 13 meeting and a final version to be approved at the June 10 meeting.

Under the first increase option of 3.7 percent, property taxes would go up 2 mills for district residents in Crawford County. For the owner of a property assessed at the district median value of $30,275, that would mean paying $60.55 more each year than the current $1,627.28.

Under the 7.5 percent increase option — the highest increase allowed without voter approval — the same property owner would pay $122.05 more each year than the current rate.

As she concluded, Eckart offered an apology for the detailed nature of the presentation.

"I'm sure it's boring," she said with a laugh.

Brown, on the other hand, offered a different take.

"It's depressing," he said.

Mike Crowley can be reached at (814) 724-6370 or by email at mcrowley@meadvilletribune.com.