AASD eyes continuing deficit, tax increase

Board to decide between two budgets

After a review of a proposed $114 million 2019-20 budget, some Altoona Area School Board members want to reconsider adding a tax increase to it.

What was particularly alarming to all board members and administrators Monday night was a general fund projection for the three years from 2020 to 2022.

It showed that the district’s expenditures could not be matched by revenues even if the board raised taxes to the maximum allowable amount each year.

To adjust for annual deficits, the district’s fund balance would get smaller and smaller each year.

The fund balance is currently $50 million. But with deficits projected each year after 2020 of at least $7 million, the fund balance would shrink to $15 million by the end of 2022.

And what happens a few years after that?

Board member Dave Francis looked at business manager Camilla Houy, who prepared the presentation.

“We’ll be bankrupt in six or seven years,” Francis said.

“We could be,” Houy said.

And if the district goes bankrupt, then the state government takes over the district and establishes a new board, solicitor Elizabeth Benjamin of Beard Legal Group said.

“We have to cut or do whatever we have to do. We can’t do nothing, let the state come in and take it over,” Francis said.

Francis said when he ran for the board, he was against raising taxes, but looking at the red ink in front of him, he said he believes a tax increase is absolutely necessary.

Kelly Irwin Adams agreed.

“I think we need a tax increase,” she said.

Looking back at the two consecutive tax increases, board member Bill Ceglar said he believed taxpayers needed a break.

Other board members decried the possibility of the state taking over but did not say whether they would vote for a tax increase.

A maximum tax increase in 2019 would generate $600,000. That would not help much to plug a $9 million deficit that district administrators project at the end of the 2019-20 school year.

With a millage rate of 6, Altoona Area has the lowest tax millage rate among Blair County school districts.

The Altoona Area School Board will have two budget options to choose from at its next meeting June 11. At the request of the board on Monday, Houy will prepare a version with a tax increase. That option will be set against the budget currently on public display that has no tax increase.

Ceglar took the view that the state created the problem that all districts, not just Altoona Area, face.

“The state created this problem,” he said, namely by past decisions of lawmakers to underfund the state’s Public School Employees’ Retirement System.

For years, employee pension contribution costs to school districts have been spiking because of mandates by the state to make up for past decisions that underfunded the retirement system.

“It’s a problem the state created,” Ceglar said. “The state is going to have to kick districts some money.”

About 60 percent of school districts represented at a recent Pennsylvania Association of School Business Officials reported being similarly strapped for cash, according to Superintendent Charles Prijatelj.

Mirror Staff Writer Russ O’Reilly is at 946-7435.