School District's $18 Million General Fund Remains Intact

At Monday evening's Southern Lehigh School Board meeting, members voted to keep the $18 million fund balance intact. However, in order to protect the funds, the money will be "assigned" to cover the district's teacher pension obligation.

At the same time, the board acknowledged that the bulk of the fund won't cover rising retirement costs.

"It's not like this is being assigned in folly," said board president Mike Eddinger. "We know we have a [retirement fund] train wreck coming."

The general fund is primarily "unassigned" funds that allow the district to use the money on an as-needed basis. The school board has had some by the community because of the unusually large fund, which is approximately 30 percent of the school's annual operating costs.

"Currently, comparably sized districts have an average of 10 percent [of their operating budget] in reserves," said district business director Jim Snell.

A motion was made to use the bulk of the general fund for the Public School Employees' Retirement System -- the system the district pays into for district employees' pensions. "We should keep some number between 5 and 8 percent unassigned, and assign the rest," said Snell.

The motion was made days after an online paper, The Pennsylvania Independent, released an article claiming that of school districts. Large general funds could make school districts targets for cuts in state funding, as it did in New Jersey. "A large unassigned fund balance makes us a target," Snell told the board. "By assigning this money, I think we provide some rationale [for holding $18 million] and the state would be impressed."

Even the bulk of the money won't be enough to cover the district's retirement burden, which will increase with the large number of teachers on the edge of retiring. At this point, Eddinger talked about a retirement fund "train wreck coming."

The motion passed, though other board members had different ideas for what should happen with the large general fund. “This money represents an overtax to the people," said board member Jeff Dimmig.

Dimmig proposed reducing the fund by giving each family a $100 tax credit. "It gets the money to the families that need it most," said Dimmig. He also stated he felt the $18 million cushion was keeping the board from making cuts to get ready for the annual shortfall the district is facing. "[Reducing the general fund] allows us to get serious about the $3 million structural deficit we're facing."

The rest of the board disagreed with that rationale. "I am categorically against rebates," said board member Dr. Elizabeth Stelts. "I think it's stupid when the federal government does it, and if we do it, it's stupid."

Others, meanwhile, said they felt comfortable with the large fund balance. "Personally, I'm comforted by the large fund balance," said board member William Hayes.

"The fund balance helps us get through [hard times] without having to make any special cuts," said board member Dorothy Mohr.

The measure was defeated 8 to 1. "We’re in a position to weather the storm without compromising the quality of education like we’re seeing in other districts," said Eddinger.  "[Other districts are seeing] test scores drop; we see them furlough teachers. I don’t want to be there. And we won't have to make those kind of changes because of the fund balance."