Why the School Closure has NOT Saved the District (Much) Money

There’s myth circulating that closing the schools for the rest of the year means substantial cost savings for districts like East Penn. If only this was true! The reality is that virtually all school district costs are fixed, either by the nature of the costs, by legal contracts, or by state mandate.

The East Penn School District’s greatest asset is its people, and this is reflected in the fact that salaries and wages make up about 70% of district costs. Many of these people continue to work hard providing distance education, maintaining school buildings, supporting special education students, etc. In addition, Harrisburg’s Act 13, passed earlier this month, requires the district to continue paying all of its employees their regular salary or wages whether they are working or not. So there is no savings at all in the largest part of the budget.

The remaining 30% of the budget is mostly made up of fixed costs too. With ten large buildings to maintain across the district and a significant technology/internet ‘backbone’ that is being actively used, infrastructure expenses continue whether school is in session or not. There are some minor savings to electrical bills, classroom supplies, and so forth. The district did renegotiate its contract with the bus company, saving taxpayers approximately $1 million in anticipated transportation costs this spring. But the overall savings has otherwise been small. Bob Saul, East Penn’s Treasurer, estimates total net savings at about $411,000– or 0.2% of budgeted expenses.

So no, there is not much money that might be given back to taxpayers. Or used to weather this storm in the coming months. I wish the news were better.

5 thoughts on “Why the School Closure has NOT Saved the District (Much) Money”

  1. Is the $6.2 million of lost revenue in the current budget year (FY19-20) or for next year (FY20-21) or a combination of both years?

    If $1 million was saved in busing cost, why is the net district savings only $300,000? Did other costs go up? Or is part of the difference a loss of transportation re-imbursement revenue from the state?

    • The status of the state transportation subsidy was discussed at Monday’s meeting, but I can’t remember the details. I will have to go back and check. Good question.

    • The $411,000 (revised from $330k) is the NET surplus for the year. This is mainly because some revenue shortfalls have already hit the district and are thus part of the current budget year. You can see a complete breakdown of the items impacting the current year’s budget estimate on page 31 of the budget document linked to in my post.

    • Yes, here’s the breakdown: A drop in local real estate tax collection ($820,000), interim real estate tax collection ($690,000), Earned Income taxes ($1,330,000), real estate transfer taxes ($400,000),delinquent real estate tax collection ($130,000), interest income ($460,000), state transportation subsidy ($800,000), and reduction from 3% proposed to 1.5% real estate tax increase ($1,340,000). The remaining $231,000 reduction in estimates comes from a variety of smaller factors. All of these numbers, and fuller explanations, are available publicly here: http://go.boarddocs.com/pa/epen/Board.nsf/goto?open&id=BNAQ2P6737C7 (see pp.2-5 explain the estimates, a table summarizing their impacts is on p.31)


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