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Early School Budget Projections Show $1.9 Million Deficit

Increasing pension costs and double-digit health insurance increases are the driving forces behind Hatboro-Horsham School District's budget shortfall.

Hatboro-Horsham School District is facing a $1.9 million budget shortfall without a tax increase, or a roughly $600,000 deficit with a tax hike. Photo credit: Theresa Katalinas
Hatboro-Horsham School District is facing a $1.9 million budget shortfall without a tax increase, or a roughly $600,000 deficit with a tax hike. Photo credit: Theresa Katalinas
With a 2.1 percent tax increase and a $3.6 million allocation from Hatboro-Horsham School District's reserve account considered, the district is facing a roughly $600,000 shortfall for its $93 million budget, officials said.

Without the tax hike, the district would need to make cuts, or increase revenues to the tune of $1.9 million, Robert Reichert, the district's director of business affairs said during Monday night's school board meeting.

Of course, it is January and a final 2014-2015 budget does not have to be adopted until June. At this time last year, the district had a $1.3 million shortfall and in January 2012, the district was $1.7 million short of hitting its budget mark.

"We're obviously going to be working very hard," Reichert said, adding that there's "a lot of work to do" between now and June. 

The school board last month adopted a resolution vowing to keep tax increases within the amount permitted under Act 1, which, for 2014-2015 is 2.1 percent.

The district is looking to implement out-of-the-box cost-saving options, like the addition of a van to transport special needs students. Reichert said that's expected to save the district $84,000 a year. 

Since salary and benefits–at $72.2 million–account for 78 percent of the budget, the district, as has been the case in recent budget cycles, intends to consider staffing reductions, demotions and reallocations, Reichert said. 

Superintendent Curtis Griffin said the district also keeps track of the number of staff members with 30 or more years of service.

"Our goal is retirement without replacement," Griffin said. "Then you do not have a cost that starts to grow over time."

In all, Reichert said the "lion's share" of the roughly $4 million increase in expenditures stems from salary and benefit costs. More than $2 million is attributed to confirmed pension costs, which will rise from 16.93 percent to 21 percent with the new budget, he said. 

The district is also facing a projected 16 percent spike in health insurance costs, which Reichert estimated would cost an extra $1.1 million more than the current budget. 

Potential options to cut medical insurance costs include higher co-pays, self-insuring and alternate plans, Reichert said. 

"We’re going to continue to look at things like that," he said. 

After salary and benefits, the district's next-highest portion of its spending plan is $15.1 million–or 16 percent–for department budgets. Five years ago department budgets amounted to $19 million, he said. 

"We've done a lot in that area," Reichert said. "Every year it becomes more and more challenging to try to make reductions in that area."

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