The story takes a look at the surpluses that districts around the county maintain and asks two reasonable questions: Why have a multi-million dollar surplus? And how much is enough?
For those complaining that taxes are too high, several district business managers offer legitimate reasons for keeping healthy surpluses. Those reasons include wanting to maintain a strong credit rating, which keeps borrowing costs down for major capital projects, and softening the blow of off years to avoid big tax increases or major cuts.
Spring Grove Business Manager George Ioannidis offered a more detailed explanation in the story:
---Many districts have been saving for what was expected to be a major pension funding crisis in two years; the crisis now seems to be lessened, although not greatly.That first reason, related to the pension funding crisis, was the one we were most interested in. That was the only mention of it in the story, which was a little surprising after what we heard in January during a school funding town hall in Lancaster. We'll have a vigorous discussion of that very issue during the countywide education summit we're hosting April 14.
---Business managers are usually of the belief it's better to have incremental tax increases, rather than no increase for a few years and then a major hike. That means a tax hike -- and excess revenue -- could happen in a year when it might not be fully necessary.
---That leads to Act 1. With a cap each year on taxes, some business managers believe a district should consider raising what it can through tax revenue in that budget year, within reason, in case the cap is below expectations the following year.
"What you're doing is front-loading," Ioannidis said. "It gives you room to make budget cuts in less of a reactive way. You can ease your way into those cuts."
What do you think? Are districts being prudent fiscal managers? Or could they reduce the surpluses and give taxpayers a little relief?
- Dan Fink