Property taxes reduced in final North Allegheny budget

By David Guo, Pittsburgh Post-Gazette

The North Allegheny school board's best guess concerning next year's budget has turned out to be wrong, not that many taxpayers are expected to mind.

The board unanimously approved a $110.2 million spending plan June 20 that calls for a 0.38-mill reduction in the property tax rate, or $38 on a home assessed at $100,000. The new rate will be 19.34 mills.

The new figures were $1.3 million lower than those in the preliminary package approved in January, a savings that finance director Mike Hopkins primarily attributed to his getting a better handle on payroll costs such as medical insurance, salaries and retirement.

Fifty-six employees wound up retiring this year, a total that was higher than Mr. Hopkins had anticipated in January. Thirty-four were teachers. The district will work over the summer to determine how many positions can be filled based on fall enrollment, retirement costs and the lower salaries paid to new hires.

The other major factors were utility bills and general insurance premiums that should be lower in 2007-08, as well as a less expensive photocopying lease and revised costs for sending students to the A.W. Beattie Career Center in McCandless.

Mr. Hopkins identified four areas of major cost increases totaling about $3.07 million, including salaries, retirement benefits, medical insurance and charter school payments.

He also cautioned the board that certain factors could affect the bottom line that were largely beyond North Allegheny's control -- the ongoing county tax reassessment case and the politically volatile 2008 state budget.

About $700,000 in North Allegheny refunds prompted by property owner appeals of the 2002 base-year assessment have been accounted for, but there's still $900,000 worth unresolved. Based on prior experience, he suggested that the district could expect to win half.

In Harrisburg, meanwhile, the GOP-controlled state Senate has approved a $27 billion budget that is $300,000 less than the version backed by Gov. Rendell and the Democrat-controlled House. The budget battle is far from over, since the House is set to push for restored funding for mass transit and, perhaps, education.

Left unsettled is what the district's state subsidy will be, an amount that should cover 18.3 percent of the district's budget next year -- about half of what the statewide average is, but nonetheless a vital revenue source.

"Funding could be altered dramatically by the Harrisburg showdown that comes in the next few weeks," Mr. Hopkins said.

The largest slice of the North Allegheny budget remains for instructional items including teacher salaries, benefits, supplies and services. More than $44 million goes for salaries, primarily for the district's 580 classroom teachers whose average salary is $69,138.

About $15.1 million goes for instructional-budget benefits, an amount less than had been anticipated because of higher employee contributions for health insurance.

The support services part of the budget includes annual salaries for 37 administrators averaging $96,542, with benefit-cost increases proportionately the same as for teachers.

Board members universally praised Mr. Hopkins and financial analyst Sherri Ludwig for being able to craft such a detailed plan despite an accelerated budgeting process prompted by state Act 1 mandates and property tax reform.

Still, at least three board members were concerned that a larger tax cut might have been possible, given a budget surplus of about 8 percent. The 8-percent cap is often referenced in school tax debates since it is the most a district can hold in reserve if it wants to get state approval for a millage increase.

"I think this body needs to keep an eye on this fund balance," said Alan Shuckrow. "If we have another surplus next year, I think we have to look at ourselves and say we need to be returning some of this surplus to the taxpayers," he said.

Ralph Pagone was disappointed the tax break was so meager, while Scott Cunningham later said that he would have preferred a tax cut tied to a smaller fund balance of about 7 percent, which would still allow the district to cover a year's worth of bond payments.

The three had opposed last year's tax increase.