Kennett School District proposed tax hike will cost homeowners $148 more per year

KENNETT SQUARE >> A new preliminary budget for the Kennett Consolidated School District includes a proposed tax hike that will cost the average household about $148 a year.

Board member and treasurer Michael H. Finnegan said the tax increase was made necessary mostly by costs mandated from outside the district, in particular retirement fund contributions and payments for students who attend charter schools.

The millage rate would go up to 30.0540, a 2.79 percent increase, Finnegan said at the beginning of a presentation on the proposed budget.

The overall budget is $84.5 million, Finnegan said.

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Finnegan said one big factor requiring a tax hike was the soaring rate of teachers’ retirement fund contributions required by the state. In the early 2000s, he said, the retirement accounts were overfunded, so the state cut the percentage the school system had to put in for every dollar spent on salaries.

Then came the recession of 2008, and the fund became seriously depleted by the stock market decline. The state responded with a series of steep increases in the amount schools had to contribute to the retirement fund.

“Now, all of a sudden, they’re playing catch-up,” Finnegan said.

From a low of 4.7 percent in the 2005–2006 school year, the rate today stands at 32.57 percent and is set to climb higher in the future.

Retirement contributions added to the overall increase in benefit expenditures, which Finnegan said went up from their 2016–2017 figure of $19.3 million to a projected $20.6 million in 2017–2018, an increase of $1.2 million or 6.5 percent.

Two other factors driving costs were payments required for children who attend charter schools, and the failure of the local real-estate market to rise in value as much as surrounding districts in the post-recession financial recovery.

Finnegan stressed that these expenses were forced on the district. “Everything we can control, we’re controlling really well,” he said.

Medical coverage cost only rose by 1.69 percent, Finnegan said, and a number of other expenses had stayed within reasonable bounds.

Board member Aline Frank said she was “very uncomfortable with this tax increase” and suggested the public become more involved and vocal with its state government representatives.

Robert Norris, another board member, pointed out that relatively little of the proposed budget is discretionary, and echoed Finnegan on the depressed revenues from real estate taxes.

“The reality of the equation is we have less money now than we did then,” before the recession, Norris said.

But the district could not maintain its high achievement levels without raising revenue, Norris said.

Finnegan said the preliminary budget will soon be posted on the district website. The finance committee will meet the first Monday of every month to deliberate it, and those meetings are open to the public.

Potential legislative action in Harrisburg might ease the district’s budget problems, Finnegan said, and if teachers retired and were replaced by younger ones the salary costs would go down to some extent. Enrollment could also affect the budget figures, Finnegan said.

The preliminary budget passed unanimously.