School Budget Overview

Compared to how most of us create a personal budget, creating a school budget probably seems backwards. After determining how much we expect to make, we compare it to expenses for the same period. If expenses are more than we expect to make, we trim unnecessary expenses until we can cover them with our income. Hopefully, we can cover the basic necessities.

A budget for a public school in Pennsylvania is a little different. Actually, it is pretty simple.

First the people responsible for creating the budget (the Superintendent and Business Manager at Kiski Area) forecast how much they expect to spend for the next fiscal year. Then, if prior revenues and cash on hand are sufficient to cover expenses, nothing further is required - any excess can be used to build cash reserves, reduce debt, or fund additional projects. If not sufficient, school property taxes are raised to cover the shortfall. The budget is discussed at a Finance Committee meeting (open to the public at Kiski Area) and later voted on at a school board meeting with a roll-call vote.

The approved budget exceeds 52 million dollars and falls into 5 categories. For 2013/14 the percentage by category for the proposed budget is:

Unlike Ohio or New York, voters in Pennsylvania do not have a direct vote on the budget and must rely on their elected school board directors.

Although Pennsylvania law limits the size of these property tax increases, the law can be over-ridden as happened in 29 Pittsburgh area school districts this year. So there seems to be no real protection for tax payers if the district digs a financial hole for itself.

You may download an online copy of the 2013/14 preliminary budget from Kiski Area's home page. Please note that section I (debt) is not included in the document.

Budget Growth

As shown in the chart below, the school budget for Kiski Area has grown 42.6% from the 2000/01 school year until the 2013/14 school year. This at a time when K-12 enrollment dropped from 4634 to 3735, a 19.4% drop. In 2000/01 Kiski Area budgeted about $7,900 per student enrolled; in 2013/14 the approved budget is about $14,000 per student.

This is not budget creep, it is growth.

What drives budget growth at Kiski Area?

In any budget, expenses are broadly categorized as:

• Discretionary - an expense you have some control over and may be able to eliminate or find an alternate solution
• Non-discretionary - an expense mandated by legislation or contract
  

Non-discretionary budget drivers

At Kiski Area, non-discretionary items are the primary driver of the budget. Once the legislation or contract is in place, the school board has little control over the expense. And they will be the first to remind you of this when questioned about budget growth.

But "once the contract is in place" is really the key. In the case of Kiski Area, the school board is entirely responsible for the primary driver of budget growth - the Agreement between Kiski Area School District and the Kiski Area Education Association (KAEA). With that in place, not only do wage costs increase significantly each year, but there are significant increases in costs associated with these salaries. Retirement contributions, for example.

Are non-discretionary costs driving budget growth? Yes.

Is the school board responsible for this? Yes.

Other budget drivers

Another driver of budget growth is debt.  Kiski Area has gone from $15 million debt secured by bonds in 2001/02 to the current level of $67 million as a result of 2 building programs. Bond holders expect to have their investment plus interest returned, and Kiski Area is responsible for both. As can be seen in the pie-chart above, debt service (including liabilities) amounts to almost 10% of the total budget.

Like wages, bond repayments and interest are non-discretionary; they must be met or KASD will be in default.

Like wages, this is self-inflicted.

Digging deeper

This is a first cut at exploring the school budget. This information will be refined as each category of the budget is examined in more detail.

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