Report: Pennsylvania school districts stand to lose $1B in local revenue due to pandemic - TribLIVE

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Pennsylvania’s school districts are projected to lose up to $1 billion in local revenue for the 2020-21 school year because of the covid-19 pandemic, according to an association of the state’s school business managers.

“Every school district tax source and other nontax revenue will suffer a precipitous decline for the upcoming school year,” said Timothy J. Shrom, director of research for the Pennsylvania Association of School Business Officials.

The revenue would be lost in a number of ways:

Reduced income tax revenue caused by surging unemployment.
Reduced real estate transfer tax revenue caused by the pandemic’s effect on the real estate market.
Reduced property taxes because many property owners will need more time to pay.
Lost interest earnings caused by rate cuts.

If the economy makes a quick turnaround, the state association said the loss could be less, but it would still exceed $850 million combined. If the recovery lags, lost revenue could approach a combined $1.1 billion.

Currently, the districts collect about $18 billion, so the projected losses represent a 4% to 5% drop in revenue, the association said.

While the money coming in is anticipated to go down, the amount going out is increasing. The association said districts face rising costs for things such as charter school tuition and special education.

Franklin Regional is projected to lose between almost $950,000 up to about $1.1 million, according to the association.

Spokeswoman Cara Zanella said the district “is concerned about PASBO’s projected revenue decline that districts across the commonwealth will experience due to the covid-19 pandemic,” adding the administration and school board are “closely watching the situation as we plan and prepare for the 2020-21 school year.”

Hempfield business Manager Wayne Wismar anticipates that his district’s income will take a hit for the coming school year, but he said it’s too early to make accurate projections on just how big it will be.

PASBO projects Hempfield’s losses at between $3.1 million and $3.6 million.

“I am hoping that the PASBO projection is high,” Wismar said.

While 65% of Hempfield’s revenue comes from local sources, Wismar said he is concerned about a loss in state subsidies.

“That would be a more significant impact to the district,” he said.

In addition to less revenue and higher spending, the association said districts are further challenged by a proposal in Harrisburg that would force school districts to freeze property taxes for the 2020-21 school year at their current rates.

The proposal passed on a 15-10 party line vote in a state House committee Monday. It wasn’t known when it would go to the full House for a vote, said Mike Straub, spokesman for House Majority Leader Bryan Cutler, R-Lancaster County.

Straub said the measure’s intent is to let property owners know they will not face a significant increase in property taxes at a time when everyone is making sacrifices that impact their daily lives.

A freeze would not affect Hempfield, which already was looking at leaving its property tax rate unchanged, Wismar said. He said the 2020-21 budget will be about the same or slightly less than this school year’s $98 million spending plan.

“We have held building-level and department-level budgets flat for six years,” he said.

The state limits school district property tax increases by an inflation index that is adjusted for each district.

Districts that want to increase their property tax rate by more than their limit have to get approval from voters in a referendum or seek exceptions to a referendum from the state Department of Education, which grants exceptions for special education and retirement costs and certain construction debt.

For the 2020-21 school year, the state Department of Education approved about $44.9 million in exceptions for 64 districts, with 62 of the districts citing special education spending as the reason why they wanted to exceed their limit.

Where Gov. Tom Wolf stands on the proposal is unknown. A spokesman did not respond to a request for comment.

The state approved referendum exceptions for six districts in Allegheny County: Bethel Park, Carlynton, Chartiers Valley, North Allegheny, Penn Hills and Plum. New Kensington-Arnold was the only Westmoreland County district to receive an exception.

Capped at 3.32 mills, New Kensington-Arnold’s exception allows the district to raise taxes up to 7 mills. The district would garner about $781,000 on a hike that large, according to business Manager Jeff McVey.

The district’s budget deficit for 2020-21 is now expected to be $1.85 million, McVey told the school board this week. Covering that deficit would eat up all of the district’s reserves, totaling about $1.5 million, and another $360,000 from either a tax increase or cuts in spending.

PASBO projects New Kensington-Arnold to lose about $767,000 to $968,000 in revenue.

Superintendent John Pallone did not respond to a request for comment on the PASBO report or the proposed property tax freeze.

Brian C. Rittmeyer is a Tribune-Review staff writer. You can contact Brian at 724-226-4701, brittmeyer@triblive.com or via Twitter .

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Report: Pennsylvania school districts stand to lose $1B in local revenue due to pandemic - TribLIVE

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