The Wallenpaupack Area School Board adopted an early budget of more than $61 million to seek an exception for a referendum for tax increases.

The Wallenpaupack Area School Board adopted an early budget of more than $61 million to seek an exception for a referendum for tax increases.
The budget totals $61,353,803 in expenditures. The preliminary budget includes tax increases of 5.49 percent in Wayne County and 3.46 percent in Pike. Superintendent Michael Silsby explained the Board was passing an early budget so they could apply for an exemption to the Act 71 tax referendum. The act requires Districts to seek a referendum on the May ballot if it intends to increase taxes over an index set for each school district by the State. Wallenpaupack’s this year is 2.9 percent.
Silsby said there were a number of exemptions districts could apply for to avoid a referendum. He said they would be seeking an exemption for retirement costs which will exceed the index this year.
Wallenpaupack and all school districts are facing an increase in required payments to the PA State Employee Retirement System. The fund handles the retirement funds for all State employees. The large increase this year is needed to make sure the fund can meets its demands.
Retirement costs are funded by three groups. Each employee pays either 2 percent or 2.5 percent of their pay. The difference is based on the increase in benefits approved by the State a few years ago. New teachers pay 2.5 percent, while teachers working prior to the increase could choose whether they wanted to stay under the older system or join the newer one.
The State and school district split the remaining costs 50/50 with the school paying the whole amount and the State reimbursing its share.
Silsby said the fund was facing a “cliff” in that in a few years it would no longer generate enough funds to meet its future demands. He said the problem began several years ago.
PSERS changed the formula used to determine the payments several years ago when another steep increase was expected. The change lessened the increase but left the fund with a gap that created the cliff.
Poor market performance may also have an affect on the increase, but the cliff had been predicted by observers before the current economic downturn.
Wallenpaupack faces a $1,097,028 increase in retirement payments with the State paying $542,958 of that. Silsby said they expect to get the exemption to the referendum for the increase.
Silsby said the early preliminary budget was also the worse case scenario. Normally, the preliminary budget is due in April and the final budget by May. The early budget is required when seeking an exemption or if a district were to seek a referendum approval so the referendum can be prepared and placed on the ballots.
Silsby said he believed the final budget would be better for taxpayers. He said he expected the administration would find ways to trim costs and he hoped additional funds from the State and Federal government would also help.
The preliminary budget was approved Monday, before Gov. Ed Rendel presented his budget plan to the State Legislature. While Rendel announced increases in education funding, the budget still has to be introduced in the Legislature and passed. It could change dramatically before it passes and is ready for his signature.
“Our hope is that what we pass tonight won’t be what we pass in May,” Silsby said.