Apr. 8—SUNBURY — Property owners in the Shikellamy School District will most likely see some sort of tax increase but directors vowed to work as hard as possible to keep it to a minimum.
At Tuesday's work session, district business manager Brian Manning and Superintendent Jason Bendle warned the district faces staff reductions and pay freezes if the directors don't raise taxes.
Manning said the preliminary budget will include a 4 mil tax increase, which is about $68.50 per household based on the median assessed value of homestead properties at $17,150, but that number is not final. Directors have to make tough choices in the near future, he said.
"If we don't, in the not-so-far future, we wouldn't be able to make payroll," Manning told the board. "If we don't do something now, by 2024, we would be in that situation."
Shikellamy is scheduled to receive more than $6.5 million in federal COVID-19 stimulus money but Manning said that money was not included in the preliminary budget because it would be a one-time fix and it would only delay the structural deficit and allow it to continue to get larger down the road.
The proposed budget also includes the reduction of one administrator, three teachers, two custodial staff members, and a pay freeze for administration, although Bendle said with the restructuring of Beck Elementary at the beginning of the 2022-2023 school year, furloughs may not occur.
"You as a board made tough choices and none of it is easy," he said.
Since 2019, Shikellamy has furloughed nine teachers, with three of them recalled to work, eliminated four support staff positions and the district turned virtual academy teachers into Shikellamy teachers for a total of more than $1 million in savings.
Manning and Bendle said students attending outside cyber schools are roughly costing $2 million per year out of the $51 million a year budget.
In a five-year budget model, Manning said Shikellamy will exhaust its fund balance in 2 and a half years if the district does not raise taxes in the 2021-2022 year and decides to only raise taxes 2.6 percent in future years.
Manning and Bendle said that students attending outside cyber schools are roughly costing $2 million per year out of the $52 million budget.
Directors sat and listened and asked what would happen if the district went broke and state officials entered to oversee the district.
"Programs would be taken away," Bendle said. "Art, music and programs that are very important to the students. We do not want to impact the students and we want to make sure we are all doing what is right for them."
Bendle said even though the decisions are tough, they need to be made.
"If you wait for the explosion, then it is too late and worse for the kids," he said.
Bendle also said the district is operating with a "barebones" staff district-wide as it is.
Considering Act 24
Facing a potential deficit of nearly $2 million next year, director Slade Shreck said he is in favor of taking the steps to replace the occupational assessment tax with an earned income tax.
The occupational assessment tax, generally based on a job title or category, has long been considered an antiquated and often inequitable form of taxation, and most school districts in the region replaced it with an earned income tax more than a decade ago.
The authorization to eliminate occupational assessment taxes was outlined in the Optional Occupation Tax Elimination Act 24 of 2001, and was later recast in Act 511 in 2008.
It allows school districts to use specified calculations to determine the earned income tax rate that would be assessed if the occupational assessment tax is replaced. Individuals would be taxed on what they earn, not a job title.
The district would then guarantee they are getting their tax money, whereas they have now had thousands of dollars in outstanding fees that may never be collected.
In order to change the occupational tax, directors would need to vote to allow the decision to be made by the taxpayers and placed on a ballot.
District officials estimate that, if it were done last year, the tax change would have added much as $800,000 to the district's bottom line.
The last time the board even voted on putting the choice on the ballot was in 2015. With a 3-3 vote, the measure failed.
Selinsgrove, Lewisburg, Milton and Danville have all implemented Act 24.
Shreck said the move would help the district and the taxpayer.
"For example, if you use the title of manager, some make $25,000 and some make $250,000 but both are paying the exact same tax," he said. "This is not fair and, if we would allow the public to vote on this change, it should be up to them to decide."'
Shreck said it also makes it easier for the district to track people.
"Right now we have no idea who isn't paying or who has not paid," he said. "I truly believe from the people I have spoken with that they would rather lose a couple of bucks out of a paycheck each week than have to pay it all at once."
Manning said Act 24 would result in the district making more money in the first year but it would even itself out over the years to follow.
He said when a person doesn't pay the tax, eventually, they are found by a collection agency and wages can be garnished.
Shreck said that money would come back to the district slowly, but with Act 24, the district gets it quicker and with fewer headaches to both the district and taxpayer.
Shreck said the district has lost countless dollars in years past because of not having Act 24 implemented.
"We would be in way less of a hole right now," he said. "I will be discussing this with the board once again and hoping we all allow the public to make the decision on whether or not they want it."