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School Board In No Hurry To Spend Surplus

Pottsgrove Business Administrator David Nester discussed options Tuesday to deal with the district surplus

LOWER POTTSGROVE PA – Rather than make an immediate decision Tuesday night (Oct. 24, 2017) on how to fully use a $1.17 million cash surplus, members of the Pottsgrove Board of School Directors unanimously agreed to allocate only a portion of the money – $375,000 – to a fund dedicated to help pay future employee retirement costs. They held off on determining what happens with the remainder.

Directors acknowledged they may take several months to make their choices on distributing the $798,000 that’s left from a combination of unexpected income and budgeted expense savings which led to the surplus. Technically, district Business Administrator David Nester explained, they had until a proposed 2018-2019 budget adoption deadline of June 30 (2018) to announce their plans.

No one intends to wait that long. Directors favored Nester’s call to recommit money to the district account that pays bills from the Pennsylvania Public School Employees Retirement System (PSERS), and acted on it quickly. Board member Rick Rabinowitz called it “a no-brainer,” and his colleagues apparently thought so too.

Board members also generally liked, but did not act on, Nester’s suggestions to

  • Recommit $189,000 to a reserve fund to pay the district’s share of any unanticipated expenses for the Western Montgomery Career and Technology Center;
  • Purchase new accounting software for about $200,000; and
  • Save the rest (roughly $409,000) in the district capital fund to pay for a 10-year plan of future building repairs that include a nearly $4 million roof, structural repairs, and windows for Pottsgrove Middle School, and replacing an air chiller unit at West Pottsgrove Elementary School.

Rabinowitz contended incoming board members – to be selected next month by district voters in local elections, and who will take their oaths of office in December – should have the opportunity to decide where the bulk of the surplus will be used. Director Robert Lindgren said he also would prefer “to give new board members that opportunity.”

Directors also heeded director Ashley Custer’s request to better research their options. “I’m not comfortable in handling all of this right now. We just got this information. I’d rather study it awhile,” she said.

Of Nester’s list, coming reconstruction needs clearly were foremost in board members minds. The capital fund currently is valued at about $8.6 million, he reported, and the 10-year plan proposes to spend between $12 million and $15 million on fixing problems at aging buildings. Nester said he hopes the board will “accumulate north of $10 million” in the fund before that work begins.

Rabinowitz indicated he was thankful the surplus was available. With the amount of building expenses looming, “if we didn’t have surpluses we’d have a problem,” he said.

The middle school roof, highest on repairs agenda, is scheduled to occur during summer 2018.

The surplus resulted from what Nester described as unexpectedly higher revenues from earned income taxes; in short, district residents earned more wages, and paid more taxes. The earnings trend, apparent for a second consecutive year, bodes well for the local economy, he claimed.

Another portion of the surplus arrived as a one-time real estate transfer tax payment made when ownership of the Upland Square shopping complex changed hands. An increase in state subsidies also accounted for some of it, as did reduced costs for salaries, health insurance, and other items, according to Nester.

The surplus represents the district’s excess of revenue over expenses, Nester noted. It does not include $600,000 the district was prepared to extract from its PSERS fund to cover an budgeted revenue shortfall, but ultimately didn’t need.

Related (to the Pottsgrove Board of School Directors’ Oct. 24 meeting):

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