New Budget for Erie School District Will Eliminate Deficit - WICU12 HD WSEE Erie, PA News, Sports, Weather and Events

New Budget for Erie School District Will Eliminate Deficit

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The Erie School Board approved a new proposal that will balance the district's budget without a tax hike for the first time since the recession. However, more changes will be needed to keep the district out of the red.

The board has been whittling away at a huge deficit for years, which reached its peak of $26 million in 2011.  On Wednesday night, they agreed on a plan that will close the budget gap.

"The administration at this point has a proposed final budget that is balanced. So we were able to reduce that balance of $2.4 million (at the beginning of 2014) down to zero with no tax increase," said Matt Cummings, the district's director of communication.

"It's still a draft. It'll now go on display at the public library and we'll have it available in the board office. But what we've done is we've cut ourselves to a balanced budget yet again," said Jay Badams, superintendent of the Erie School District.

One factor that helped close the gap: more retirees than expected. Seventy will retire at the end of this year, while the expected number was about 40.

About 15 of those positions won't be refilled, though details -such as which jobs will be eliminated- won't be decided until June 30th, the boards deadline to approve the final budget plan.

Another facet that helped close the gap: pulling money from the district's health trust.

"We were also able to pull about a million dollars from an insurance policy that the district has. So that's one time money but it helps balance this year's budget," Cummings said.

Though the proposal means the district's deficit will be eliminated for 2014-15, Badams is still very concerned for the district's financial future, and calls the current revenue-expenditure plan "unsustainable."

"We're facing in five years, another deficit like the one we faced three or four years ago of over $26 million. It's just simple math. Our expenses will rise and our revenues are expected to be flat, and until that changes, there's very little else we can cut," Badams said.

The superintendent also says major changes are critical keep the district out of debt.

"Right now the way we are funded, all of our budgets are unsustainable. We will be in deficit mode until such a time where either the funding formula changes, or something dramatic happens like the economy turns around in Erie - such as if more of our properties came out of tax exempt status," said Badams. "Until those sorts of things happen, we're going to be continuing to fight this. And probably within five years, if nothing changes, we will be broke." 

Still, this plan that balances the budget for next year brings relief, and hope that decisions in Harrisburg can help Erie schools maintain financial health.

"It's a temporary relief. We know we'll be facing an uphill battle, but I think right now a lot of those battles are being discussed politically. There's move afoot right now in Harrisburg to revisit school funding, so we are hopeful that will help," Badams said.

One specific piece of legislation Badams mentioned is the charter school reimbursement, which was eliminated four years ago. A return of the reimbursement policy would give the district back about $8 million per year, reducing the $17 million the District gives to charters each year to about $9 million.

Another decision the board approved was to outsource the district's substitute teachers to a third-party company, Kelly Education Services. It was denied in an April meeting, but the board approved the motion 6:3 in favor of outsourcing substitutes on Wednesday night.

That decision will save the district money by preventing the need to put current part-time substitute teachers onto the district's healthcare plan, a change that would be mandated by 2015 under the Affordable Care Act.

The board will now sit on the vote to approve use of Kelly Education Services for a period of time before it becomes official.

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