A Conversation with Representative Jaret Gibbons

Last night (May 31), I had the opportunity to attend a town hall meeting with State Representative Jaret Gibbons. The topic that dominated the two hours was, of course, the state budget.

The primary concern in the state budget is addressing the $50 billion plus deficit in the state pension system.  This problem was caused by a Republican Governor (Ridge) and the Democrats in the state assembly. In exchange for an increased multiplier to pension benefits (from 2% per year for every year of service to 2.5%), the governor got Act 48. This law demands that teachers continue to get professional development throughout their career.

According to Representative Gibbons 93% of the original $1 Billion dollars has been restored to public education. In fact, the Laurel School District is receiving about an $83,000.00 increase in basic funding as compared to 2015-2016. The problem is that costs are rising faster than revenues.

The overwhelming concern of any public school budget is the pension (PSERS) obligations. Currently school districts across Pennsylvania contribute over 30% of an employee's salary to a pension. The assessed rate of contribution has sky rocketed over the last 5-7 years and will continue to be over 25% through the year 2027. School districts will be looking for ways to financially survive over the next decade.

The Laurel School District has had to dip into its fund balance in order to cover budget short falls for the last two fiscal years (2014-2015, 2015-2016). The next fiscal year, 2016-2017, will mark the third consecutive year of deficit spending. The school district projects a shortfall of $934,000.00 despite cutting 8 positions from the prior year. Dipping into fund balances is a recipe for disaster. Fund balances are non-renewable resources. The Laurel fund balance has decreased by millions of dollars over the last three budget cycles.

The Laurel School Board would have to exceed the index, exceed the exemption for special education and raise taxes 4 mills just to cover pension. Therefore it is impossible for the district to cover it's cost.

The conclusion is as follows:

• district revenues no longer meet district expenditures
• district expenditures (salary, pension, medical insurance, etc.) will continue to rise.
• district fund balances continue to shrink
• If the state does not change the way schools are funded or the pension obligations they owe, the Laurel School District has about 3-5 years before it financially cannot exist.