Hampton school board approves plan that will not exceed Act 1 tax limit for 2020-21

Thursday, January 23, 2020 | 12:01 AM

The Hampton school board has approved not to raise the millage rates more than what the Act 1 “Not to Exceed” Budget Resolution allows for the 2020-21 budget year.

The board passed the resolution and will now be limited to not raise rates more than the 2.6 percent set by the Act 1 index for Hampton. This includes not presenting a preliminary budget which would require the district to raise taxes more than the Act 1.

School districts in the area are subject to the The Act 1, or Taxpayer Relief Act, which was enacted in 2006 by Pennsylvania State legislature in part to help put a bar on raising taxes to fund school expenses, according to Jeff Kline, director of administration.

This rate impacts a school district’s ability to raise tax rates above a certain percentage.

Kline recommended approving the Act 1 resolution. He also presented the 2020-21 Proposed Preliminary Budget and Planning Document, adding he wanted to show to ”the school board and community we can live within the Act 1 index and pass the resolution.”

The net budget shortfall for the 2020-21 budget is projected to be $845,403, which is the equivalent of 0.50 mills or 2.60 percent, according to the district report on the presentation. This shortfall falls within the Act 1 Index limit of 2.6 percent and it is recommended that the District adopt the “Not to Exceed” Resolution and continue with the “traditional” budget process, per the report.

The 2.6 percent Act 1 Index applies to the tax rate, said Kline. The current millage rate is 19.38 mills; therefore the 2.6 percent limit puts the school district maximum 2020-21 rate at 19.78 mills.

In the 2019-20 school budget, taxes for Hampton residents were raised to the Act 1 index limit but did not exceed it, a budgeting decision approved by the school board the previous year partly in anticipation of the potential renovation at the high school. This will help accommodate the multi-year high school renovation debt service funding plan.

The school district has committed to staying within the Act 1 index in 13 of the 14 years the index was established, said Kline.

Hampton had the seventh-lowest tax millage rate for the 2019-20 school year compared to other school districts in Allegheny County, according to an Allegheny County Intermediate Unit school district budget and real estate tax schedule.

Kline reminded that the 2020-21 proposed preliminary budget and planning document is in its early stages of the budget process and will most likely have adjustments. As of now, the projected net shortfall is $845,403 or .50 mills, including $300,000 for the high school project debt funding plan, according to Kline’s report.

“The budget is being done so early it is subject to change,” said Kline.

The high school renovation is projected to be a $30-$35 million project, said Kline.

The district administration and school board members will continue to work on the document in the coming months, which will include discussions at regular board meetings. The final budget is passed typically in June.

The school district’s Comprehensive Annual Financial Report for the 2018-19 school year was also presented by Kline and Peter Vancheri, of Hosack, Specht, Muetzel, and Wood, LLP. Vancheri said Hampton is one of the few districts in Allegheny County that requests this detailed of a financial report every year.

The report is available on the school district website. Overall, the audit found no inconsistencies, according to Vancheri. He said the audit reflects that the district plans for reasonable revenue and expenditure amounts in the annual budget and they come very close to those numbers.

“Your budget is realistic,” said Vancheri.

Board President Bryant Wesley said Kline and his staff put a lot of work into keeping detailed, thorough financial documents for the district.

“We are very fortunate to have a realistic budget and know what we have to work with,” said Wesley.