North Hills School District will be raising property taxes....again....

There will be a property tax increase in the budget for North Hills School District this year.  That is a fact.  This will be the 2^nd year in a row that the NHSD will increase property taxes.

Now some are very quick to point the finger at Governor Corbett and his cuts to education, but let me tell you, this tax increase was planned long before the proposed budget from Governor Corbett was released.  So don’t break your finger pointing it just at him.  Use your other fingers and point them at the members of the North Hills School Board.

The details of the tax increase can be a bit confusing, but the district designs them that way because they think the simple folk won’t bother to take the time to understand them.  Let me try to break it down for you.

On June 27 2006, the Taxpayer Relief Act, commonly referred to as Act 1, was enacted by the state legislature and soon thereafter became the law of the land.    Act 1 was intended to ease “the financial burden of home ownership by providing school districts the means to lower property taxes to homeowners, especially senior citiens, via the funding provided by gaming revenue.”  In other words, legalize gambling in PA and we will reap the benefits of the money that this brings in.  You may remember getting a notice about applying for the Homestead Exclusion and then seeing a slight decrease in your property taxes, with a promise of more decreases to come.  Funny thing, I only remember seeing one decrease and several increases.

Not only was Act 1 supposed to decrease our property taxes, it was supposed to limit the amount that a school district could raise our property taxes in a single year.  This was to be accomplished using the rate of inflation. The Department of Education would set an inflationary index and if a school district wanted to raise property taxes above the indexed rate, then it would need to be approved by voters through a referendum.

Sounds all well and good except for one thing, there were exceptions built into Act 1.  These exceptions allow the school district to raise taxes by more than the allotted index if certain situations were to arise.  Let’s call these exceptions what they are – loopholes.  There are 10 possible loopholes that school districts can jump through and use to their advantage.

So back to North Hills…..they have known for at least two years that they would be facing a huge budget gap this year because the federal stimulus funds that they were provided with over the past couple of years were used to fill the budget gaps that existed over the last two years.  The problem with that is that the stimulus funds were not designed for the long term but more like a one-time gift.  

The District thought they had this problem figured out by proposing a property tax increase.  The District planned to increase property taxes by not only the allowed tax increase under Act 1, but also TWO additional exceptions/loopholes for an overall property tax increase of approximately 1 mill.  Simple answer…right? 

Now enter Gov. Corbett’s proposed budget and the district has to come up with an additional $600,000 dollars.  It remains to be seen where this money will come from.

One solution that the School Board came up with was the early teacher retirement incentives.  They offered 29 teachers early retirement packages, giving them a sweet bonus if they retired this year instead of continuing to teach and retire at a later date.  At the moment, it seems like a great idea because it appears as if it will help to balance this year’s budget and save money.  However, how does that stack up in the long run?  Director of Finance David Hall has stated that teacher retirement incentives don’t pay off in the long run (in fact he has a whole PowerPoint presentation that outlines the drawbacks of retirement incentives for teachers). Despite Mr. Hall’s warning, the school board still chose this option.  29 Teachers take retirement package

It really appears as if this School Board is very short sighted in their vision.  They didn’t make long-term plans to address the loss of federal stimulus funds even though they knew it was only going to last for two years!  They regularly fail to analyze the impact that the decisions made today will have on the future.  They are too focused on the now instead of the “what will we be facing in 3 -5 years”.   

The School Board believes that a property tax increase will solve all their problems and are quick to implement one instead of looking at the wasteful spending that is occurring in the District.  A property tax increase may balance the budget for next year, but what about the year after that when revenues are projected to continue falling, charter school enrollment will increase, and a school voucher system may come into play?  What will happen if Governor Corbett’s proposal to close the loopholes in Act 1 and put any tax increases above the index to vote?  The NHSD won’t be able to sneak in a huge property tax increase to balance the budget.

It’s time to look at the future and realize that out of control spending needs to stop.  Despite what many may think, throwing money at education (for special programs, administrative salaries, and professional level sport complexes) is not improving our education. 

Take a look at this research.  The Mercatus Center at George Mason University in Georgia created a chart which compares educational spending per student. Check out the chart  HERE.   As you can see from the chart, the US spends the 2nd largest amount per student.  Yet even with this spending, the education in the US continues to fall behind other countries that spend less.  Kind of makes you scratch your head....

Here is another one from the Commonwealth Foundation:  Education Spending and Results

Education is important….VERY important….but that doesn’t mean that out of control spending and continuous tax increases have to go along with it.  Let’s face it, the recession has impacted nearly everyone and changed spending habits….except for North Hills School District.

This is a very critical year for the future of the District.  There are several seats up for the School Board election in May with 5 incumbents running for re-election.  Perhaps it’s time for some new blood on the board?  In addition to the election, the teacher’s contract expires in August of this year.  Both of these events will have a dramatic impact on the operations of the District in the years to come, as well as on our wallets in the future!

* As an update to this post, Dr Goodnack posted an open letter on the NHSD web site concerning the 2011-2012 budget.  If you would like to view letter, click HERE

** This post contains the views of Perry Rochester only.  McKnight Babcock has a different perspective on some of the issues raised in this blog post.