Facts About the Budget
The information below provides an overview of the Proposed 2021-2022 Mt. Lebanon School District Budget. The Final Budget will be voted on by the School Board at the May 24, 2021 School Board meeting. All meetings are accessible via Zoom the night of the meeting, and will be posted on the District website, and aired on Cable Channel 19.
For questions, you may email the School Board at email@example.com.
Additional Budget information is available on the District Budget webpage.
Development of this budget began in the Spring of 2020 when the strategic plan was being reviewed to help with goal setting for the upcoming school year. These goals were communicated through the Board and administrative staff and eventually translated into forecasts of the future in terms of enrollment, staffing, facilities, and finance. The assumptions and goals which were quantified became the guidelines for the development of the 2021-22 Budget.
Having established guidelines, program areas or departments began to develop specific budgetary requests within those guidelines to fund the next school year's needs. Special enhancements to the program were reviewed through administrators responsible for strategic plan implementation.
Budget development was a decentralized process which took each instructional program area of the District and projected the costs to run that portion of the program. Each course offering at the secondary level had to meet state curriculum requirements, as well as have a minimum student enrollment of twenty. Sections of classes below the minimum required Board review to be funded in the budget. Salary costs were determined by the collective bargaining unit contracts. Supplies and replacement equipment were based on program needs.
Any program cost which was new or equipment purchase which changed the nature of the course being offered had to be designated as a ‘Program Change Proposal’ (PCP) (also called a program enhancement) and segregated in the budget. These items were evaluated in relationship to strategic plan goals and only those items meeting the needs of strategic plan initiatives were recommended for funding. Segregating these costs allowed the Board and the community the opportunity to quickly identify the unusual items in the budget and to assess their impact on the program.
In January, 2021, the School Board approved an Accelerated Budget Opt-Out Resolution which limits the District’s ability to raise real estate taxes above the Act 1 Index. This meant, taxes would not be allowed to increase more than 3.5% or 0.8675 mills.
The Board did not raise taxes in response to the COVID-19 Pandemic for the 2020-2021 Fiscal Year. That Budget had a millage rate of 24.79--a zero mill increase over the previous year. In addition, the Board used $2,775,000 of fund balance to fund the deficit.
Currently, the Board has approved the Proposed Final Budget of $108,170,171 with a millage increase of 0.8000 mills or 3.23% with the use of $1,500,000 of fund balance to fund the deficit. The Proposed Final Budget contains increases based predominantly on salary and benefit increases for current staff and operating expenses with reduced local revenue from year-to-date projections due to the pandemic-- Earned Income Tax and Investment Income have been reduced significantly.
Public hearings were held with the School Board and televised so residents could consider the budget offerings. Use of the District’s website kept residents informed on the budget progress. Board meetings were televised for community members unable to attend.
Several key factors were considered when developing the Proposed Final Budget:
Maintain our core instructional programs to support student success
Align the budget with MTLSD Strategic Plan goals
Fidelity to our mission to Provide the Best Education Possible For Each and Every Student.
Provide value to our community through excellence in education
The School Board voted to approve the 2021-2022 Proposed Final Budget at the April 19, 2021 School Board meeting. The Proposed Final Budget for the 2021-2022 school year is $108,170,171 and includes a .80 mill increase and use of $1.5 million from the Fund Balance. The millage rate is 25.59 mills. This is a 3.23% increase over last year’s budget.
This increase translates into a $20 a month tax increase on a home assessed at $300,000. The Board will vote on the Final 2021-2022 Budget at the May 24, 2021 School Board meeting.
State funding continues to be unclear. Governor Wolf’s budget does provide much needed relief to Basic Education and Special Education subsidies. However, it is still unknown what the legislature will approve. We have accounted for only a 1% increase in these subsidies as this has been a decades long historical average.
The federal government has allocated funds to assist school districts to address issues that have impacted student learning as a result of the educational disruptions due the pandemic. The Federal government provides substantial and adequate funding for summer and after-school programs through the Elementary and Secondary School Emergency Relief - Remediation Fund Allocation (ESSER II & III).
The District has funding in place for summer programs to help address learning gaps as well as needed remediation. The District plans to expense ESSER II funding to complete the standard technology replacement schedule used to support academic departments. ESSER III funding is earmarked to support our students with their academic needs as well as their social and emotional well-being.
As real estate tax dollars arrive in the District, they are invested until needed to pay for the cost of our educational program. Through this investment program we are able to earn money which offsets the need for tax dollars.
Last year, we budgeted to earn about $1 million in legally approved investments. We actively invest monthly, and we currently have $36M of our $43M in cash invested as of the close of March 2021. The District invests all of its receipts to maximize interest income. Due to the federal reserve rates at historic lows, our returns are limited to short-term CD rates and standard checking account rates.
School districts are very limited in the types of investments that we can use. We are restricted to the vehicles described under Section 440.1 of the Public School Code and detailed in policy DFA. These investment options are only short-term, low-risk vehicles. The list is as follows:
United States Treasury Bills
Deposits in savings accounts that are FDIC insured
Obligations of the United States of America or Commonwealth of Pennsylvania backed by the full faith credit of those governments
Deposits in the Pennsylvania School District Liquid Asset Fund or similar lawful trusts authorized by School Code (this is where we put 100% of the investible money)
Shares of an investment company registered under the Investment Company Act of 1940 and the Securities Act of 1938.
This Proposed Budget includes a property tax increase of 0.8000 mills from 24.79 mills to 25.59 mills. A mill equals $2,692,289. So each resident can interpret this increase as an impact on their own home, the following chart was developed:
Average Millage Increase Over Time
The District has averaged a .48 Millage Increase or 2.01% over the last 12 fiscal years.
Utility costs will continue to be relatively level the next three years. The District has agreed to terms with an electricity supplier to fix rates over that time period. Additionally, the Board has made a commitment to sustainability with its purchase of Renewable Energy Certificates (RECs) to achieve a carbon-neutral energy footprint. The utility budget is just about $1M per year based on usage.
Over the years the District has borrowed funds for major capital projects in the form of bonds. Bonds are essentially a mortgage. For example, the debt for the 2000-2005 elementary renovations, the 2011 high school multi-million dollar renovation as well as the elementary air conditioning project were funded in part with bonds as well as tax increases. Past school boards opted to spread bond payments over multiple years to lessen the impact on the community.
The District currently has four bonds: 2013, 2015, 2017 & 2020 and their payments make up 10.5% of the Budget. The net bond payments for the next 12 years remain relatively stable. As some bonds expire, other payments increase, but the net payment stays similar. Our bond payments remain relatively level until 2033-2034. All bonds will be paid off in 2035.
Unlike most school districts, our bonds were structured for 25 years, not 30-40 years, so our debt service schedule is bigger year to year and will be paid in full sooner. Our refinance did not extend the terms of the bonds, which some Districts do during a restructuring of debt. Again, bond payments remain relatively level for the foreseeable future.
Salaries and Benefits
The MTLSD budget is very labor driven, with salaries and benefits accounting for 78.1% of all costs. District personnel costs are impacted by the Pennsylvania School Employee Retirement System (PSERS), healthcare increases, social security, workers compensation, and unemployment compensation. Over the last decade, salaries and benefits have increased by over 40% (about 4% every year). All bargaining unit groups have had at least a 2% salary increase every year during that time period. In addition, the PSERS rate has increased for Districts from 12 cents on a dollar to 35 cents on a dollar during that time frame. Each employee also contributes to PSERS as well as the State.
This year there are 18 retirements. After careful consideration of each position, we were able to maintain staffing in order to continue to provide the educational programs and services these positions deliver.
The District’s health care expenditures have also increased an average of 3% per year over the past 10 years to almost $10 million today. However, the national averages were between 5% to 15% annually during that time frame. This year health care costs have increased 5% . District employees contribute 10% - 11.5% of the premiums to their health care costs. The District’s participation in the Allegheny County School Health Insurance Consortium (ACSHIC) has significantly mitigated health care costs for the District over the last decade.
As was true in past years, the District’s budget is proposed to be in balance. In other words, budgeted revenues equal budgeted expenditures. As each prior year unfolded, the final amount of revenues and expenditures may have been higher or lower than budgeted. Over time, these excess and deficit of revenues and expenditures compared to budgeted sums were accumulated in what is known as a fund balance. In common terms, this is a district’s savings account which is intended to provide financial stability in years that revenues and expenditures do not occur as planned and additional funds are needed.
By Board Policy, the District maintains a fund balance, or savings account, of 6% of the subsequent year’s expenditure budget. With this fund balance and strong financial decision-making, the District has maintained a Moody’s Investor Service bond rating of Aa2, the highest for any school district in Western Pennsylvania. The strength of the community’s tax base and the Board’s willingness to raise taxes are also part of the total assessment by the bond rating institutions. The appropriate level of fund balance is a local decision. The adequacy of unassigned fund balance in the general fund should take into account each government’s unique circumstances. The Pennsylvania Department of Education limits the District’s unassigned fund balances to 8% of the subsequent year’s budget.
The same Board Policy directs the excess fund balance over 6% to be sent to the Capital Budget. The Capital Budget has no other source of regular funding. So these transfers enable the District to pay for capital maintenance projects at all ten of our sites without a dedicated tax.
In accordance with accounting best practices, year-end surpluses are an appropriate source for replenishing the fund balance, which this District has relied on for many years. The District’s fund balance will remain at sustainable levels through prudent fiscal management.
Projections provide a snapshot of future challenges which is an inevitable function of early predictions without the benefit of actual revenues and expenditures for that particular future year. This will likely always be true when making long-term assumptions with many unknown variables, but it is a valuable and necessary tool to prepare for the future. Projections also provide important transparency for the community.
Our primary source of income is local tax revenue. It also depends on the unknown variable of increases or decreases in State and Federal funding.
Projections with current staffing levels, bargaining unit agreements, and categorical increases in expenses coupled with the unpredictable revenue streams paint a challenging landscape every year when we open the budget season with projected deficits. As more information becomes available through the budgeting process each year, the gaps are filled in with information to provide a more realistic view of the budget.
The School District has followed best practices and the law regarding school district financial practices. The School Board and the administration serve this community with fidelity and integrity and take their fiduciary responsibility for the District very seriously.
The District’s financial position remains strong. The District is rated Aa1 by Moodys, which is the highest rating for a school district in Western Pennsylvania. In October 2020, the School District refinanced the 2013 Bond issue at 2 percent interest rate with this rating. This was yet again a very beneficial bond refinancing effort that capitalized on the School District’s careful fiscal management.
The School District’s finances are independently audited yearly - no-findings.
Federal Program monitoring was completed in the fall of 2019 - no-findings.
The Special Education Department was audited in 2020. The audit included a fiscal component - no findings.
Food Service Procurement Audit was conducted in 2020 - no-findings.
In the Spring of 2019, the District was Audited by the State of Pennsylvania (Auditor-General) - no findings.
The School District has earned the Meritorious Budget Award from ASBO for 26 consecutive years.
The School District has earned the Excellence in Financial Reporting designation for our Comprehensive Annual Financial Report for 37 consecutive years.