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Chester County Press

Avon Grove adopts budget opt-out resolution

12/27/2016 03:50PM ● By Steven Hoffman

In its final meeting of 2016, the Avon Grove School Board adopted the accelerated budget opt-out resolution, which effectively ensures that the school district will remain within the Act 1 Index limit that is set by the state each year. If school districts don't intend to exceed the Act 1 Index limit, they have the option of opting out of the accelerated budget process that would be necessary in order to get any tax increase above the Act 1 Index limit approved by voters during a Primary Election referendum in the spring.

Daniel Carsley, the Avon Grove School District's business manger, said that the district's adjusted Act 1 Index limit for the 2017-2018 budget is 3.3 percent, which is slightly higher than the statewide Act 1 Index limit of 2.5 percent.

Staying with the Act 1 Index limit will be a greater challenge this year as school districts across Pennsylvania are facing higher-than-expected pension costs for the 2017-2018 school budgets. The board that oversees the Public School Employees Retirement System (PSERS) increased the rate that school districts must contribute at from 32.04 percent to 32.57 percent. This increase was made necessary because the state's $50 billion pension fund earned lower investment returns than had been projected.

In Avon Grove, the impact of the higher-than-expected contribution rate amounts to an additional increase of approximately $60,000. School districts have been grappling with skyrocketing pension costs for at least the last seven years because the pension system was allowed to be under-funded for years after lawmakers in Harrisburg voted to boost their own pensions and increase the pension benefits for the state's teachers in 2001. It is projected that the pension contribution rate for school districts will climb for several more years before leveling off. The impact of the large annual increases is budget shortfalls for school districts before they add any new spending to meet the educational needs of students.

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