PASD Must Wrangle with Fixed Costs in Budget Process

Stan Johnson, executive director of operations at Phoenixville Area School District, is hearing feedback on the 2011-2012 budget process.

People are telling him they enjoy the open, informational way the district is doing its budget for next year. He’s heard praise on the creative and hard work being done by the district. He is, however, hearing from residents who say the district is skirting big ticket cuts or not cutting where it matters.

With the district in negotiations with three unions, including its teachers’ union, “there’s a lot that you can’t say,” Johnson said.

One thing that’s for sure is that the 2011-2012 budget contains no salary increases for personnel across the district. The Act 93 group of administrators for 2011-2012.

If the contract negotiations with the teachers’ union and the two other unions result in pay raises for those personnel, that money will have to come from elsewhere in the budget.

“We’ve tried to make that as clear as we can,” Johnson said.

For other districts, business managers and administrators come into the budget process with few things they can control. Transportation contracts may be set, fuel costs are set and unions are typically in contracts that can’t necessarily be tweaked. Medical insurance is another area that’s often pre-determined.

In PASD, however, the administrators find themselves in a unique position. With the teachers’ union working in status quo and two other unions seeing contracts expire June 30, the district has negotiating power.

If the district looked solely outside of its contracted costs, it would stand to control only 10 to 15 percent of its budget, according to Comptroller Chris Gehris.  That would be approximately $7.5 to $11 million out of what’s currently a $75 million budget slated for next school year.

Four truly fixed costs that the district can’t control are its costs for Social Security, for the Public School Employees’ Retirement System (PSERS), for charter school reimbursement and for debt services.

The district will see a 35 percent cut in state funding for Social Security if the state budget passes as presented. The PSERS contribution, a number determined by the state, will jump up 3 percent. Charter school reimbursement to PASD will result in a $1.2 million loss in funds to the district if the state budget goes through as laid out, and as for debt services, that cost will increase approximately $1 million year over year.

Costs that may be fixed for other districts, however, aren’t looked at as fixed for Phoenixville Area.

“We have been going pretty hard into the areas outside of that 10 to 15 percent,” Superintendent Dr. Alan Fegley said.

While the district has a transportation contract with Wolfington Bus Company, the district is working to re-negotiate that and reduce it by $200,000 to $250,000 by consolidating bus stops and reducing bus runs for next school year.

Last year, the district decided to become self-insured, which Fegley admitted is “a risk,” but the district is already seeing savings over what they would be paying with a private medical insurer.

“Our fixed cost there is actually done very, very well,” Fegley said.

The district does have a contract for diesel fuel and that’s going up 35 percent for 2011-2012.

“That’s kind of scary right now,” Fegley said.

Another utility cost, electricity, will decrease in the 2011-2012 school year thanks to efficiencies and measures to reduce use.

Special education is another area typically looked upon as fixed due to government mandates and outsourcing contracts, but PASD has cut out $512,000 from the preliminary budget, and its special education budget will go down year over year.

This savings was helped in part by bringing formerly outsourced services, like occupational therapy and physical therapy, back into the district. Outsourcing, Johnson noted, isn’t always less expensive. For OT and PT, the district will see a savings of $60,000 to $70,000 and will also have those positions around more days a week, building capacity within the district’s own special education program.

Personnel cuts are planned for the high school, where class sizes will be placed more in line with school board guidelines. The district won’t raise class sizes in elementary through eighth grade, according to Fegley. Also, he plans to avoid full-scale program cuts, despite rumors to the contrary.

“We’re looking at things surgically and doing thoughtful reductions, not wholesale cuts,” Fegley said. “It’s not about gouging out programs.”

Despite the fact that, even with the current 3.6 percent tax increase in the budget, the district’s 2011-2012 budget will be less than last year, Fegley doesn’t feel education will be affected. Including the cuts made before the preliminary budget, $4.9 million in cuts have been proposed for 2011-2012.

More cuts are going to be pitched to the board before the final budget is passed. The administrators said community input is encouraged, as it has been throughout the budget process for next year.

"This is far and away the best process we've had," Gehris, who has been with the district five years, said. ""When you have a lot of reductions, you need to be more open like we are."

“My hope is that the entire community would become involved in this process and not think they have no possible say,” Fegley said.

Phoenixville Area School Board meets Thursday evening at 7 p.m. in the high school cafeteria.