Hampton Township School Board plans to vote Jan. 16 on a resolution not to exceed a 4.1% real estate tax increase for 2023-24.

The percentage represents the base index established for the next fiscal year under the provisions of the state’s Special Session Act 1 of 2006, which basically puts annual caps on how much school districts can raise taxes.

Hampton’s current real estate tax is 20.99 mills. A new rate will be established in conjunction with the school district’s 2023-24 budget, the final version of which must be adopted by June 30.

In the meantime, district officials are working toward a viable plan for matching anticipated revenues with expenditures without necessarily raising taxes to the maximum.

“I’m projecting right now that we would need .72 mills,” Jeff Kline, director of administrative services/transportation, said during the school board’s Jan. 9 work session in giving an overview of a proposed preliminary budget.

A .72-mill increase would mean an extra $72 for every $100,000 of a property’s assessed value.

Kline explained that revenue projections using the current tax rate show an increase of about 2% for next year, while expenditures are anticipated to rise 3.3% over the nearly $59 million listed in the final 2022-23 budget.

“So we’re looking at a shortfall of $1,645,609,” Kline said.

In addition to raising taxes, the district can use $400,000 that is earmarked for 2023-24 as part of a “stabilization fund” established to offset costs associated with the state Public School Employees’ Retirement System.

‘You cannot get them back’

Kline, though, cautioned about the effect of setting each year’s tax rate on the district’s ability to generate future revenue.

“Mills below the Act 1 index that are not levied, you cannot get them back,” he said at the school board’s Jan. 9 work session. “You can’t say, ‘Well, we didn’t do a tax increase at 4.1% in ’23-24. So can we carry that money forward?’ You can’t. So that is certainly something that we have to keep in the front of our minds.”

School board member Greg Stein expressed support for the Act 1 resolution.

“I feel comfortable with not exceeding the state limit,” he said. “I just wonder how much you’re really going to be able to go below it, given all the future financing you need to do for project completion.”

The district, for example, is wrapping up Phase I of renovations to Hampton High School and is anticipating a second phase, along with projects at other locations. Bond issues have provided the majority of financing, and Kline projects another for approximately $3 million for 2023.

“As you know, it’s much more expensive to borrow than it was even a year ago,” he said. “But thankfully, we were able to get the bulk of those borrowings completed and the bids awarded prior to a lot of the inflationary numbers.”

Bulk of revenue is local

With regard its operating budget, Hampton generates 72.3% of revenue from local sources, according to Peter Vancheri, managing partner of accounting firm Hosack, Specht, Muetzel & Wood LLP.

“Real estate tax accounts for 83% of that number,” he told the school board while presenting highlights of the district’s comprehensive financial report for 2021-22, as prepared by his firm. The 2022-23 budget lists revenue from that source as just over $42 million.

As far as expenditures, the cost of instruction accounts for 58.3% of the total, Vancheri said.

The net expenditure in the current budget for the Public School Employees’ Retirement System is $4.775 million, at an employer contribution rate of 35.26% based on salary and wages earned from July 2022 through June 2023, with the state matching what Hampton pays.

For 2023-24, the rate is dropping to 34%, representing the first year-to-year decline since 2008-09. But on the not-so-positive side, Hampton faces higher insurance premiums in the coming fiscal year, according to Kline.

“The rates aren’t finalized, but we’re being told to look for double-digit increases on the medical,” he said. “That almost wipes out any savings that we have with the PSERS.”

Larry Vasko, school board finance chairman, also mentioned the rising costs of utilities and expressed concern about Hampton’s real estate tax rate compared to other school districts.

“There are districts in Allegheny County that won’t be raising their taxes this year, and we’re creeping up,” he said.

At 20.99 mills, Hampton has a significantly lower current rate than districts such as Brentwood, 35.7905; Penn Hills, 30.5965; and Upper St. Clair, 28.5628.

The rates for districts contiguous with Hampton are Shaler Area, 23.5319 mills; Deer Lakes, 22.69; Fox Chapel Area, 20.4288; North Allegheny, 19.74; and Pine-Richland, 19.5867.

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