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Business Manager Warns of Increased Costs

Fund balance has increased, but labor costs going up 8 percent

By Adam Reinherz
The Tube City Almanac
May 01, 2023
Posted in: McKeesport and Region News

A budget presentation by McKeesport Area School District business manager Scott Domowicz added heft to an already weighty meeting last week.

Domowicz said next year’s total proposed budget is for $86 million with an approximate fund balance of $10.6 million. The 2022-23 budget approved by the board was approximately $79.8 million.

“We’ve added to our general fund balance, however, we have to be responsible with the spending,” School Board President Latoya Wright said.

Despite the fund balance, increased costs stand to hamper the district, Domowicz explained. “Contractual labor agreements and additional staffing represents an increase in payroll expenses of 8 percent,” he said.

“There (have) been a lot of labor market pressures making recruitment and retention difficult without making some market adjustments to what we are offering in starting salaries,” Domowicz said. “And there (has) been a decline in the median income of the families that we support with the district.”

The median income in the district is about $34,379, he said.

A decline in income also represents a decline in wage tax revenue.

Of similar concern is charter school costs, Domowicz noted. In 2006-07, the district paid $2 million toward charter school tuition, he said. In 2022-23, the district paid $14 million.

If current trends continue, next year the district will pay $16 million, he said. Domowicz projected that 17 percent of next year’s budget will go toward charter school costs.

“People need to realize how much money that we put into charter schools,” Wright said.

Board Member David Donato noted that of the district’s proposed $86 million budget, “the first $14 million is used for people that don't go to school here, for kids who don’t go to schools that are in our geographic region. We need that money for education.”  

There are currently 744 students in 42 charter schools; 145 of those students are special education students, Domowicz said. This costs the district $4,389,875 in tuition payments to charter schools.

Although the district is reimbursed by the Allegheny Intermediate Unit for 60 percent of special education costs, the remaining sum is also concerning, he continued: “Thirty percent of the students in this district are defined as special ed students, and the cost to educate special ed students is almost double what it costs to educate a regular student.”

Regular education tuition payments in 2023 were $12,391. Special education tuition payments were $30,275, he said.

Moving ahead, there are key figures to consider, he explained.

“Instructional support expenses account for 82 percent of our budget. Debt service and payments account for 11 percent, operating expenses only account for 7 percent of the budget. So if you look at some main categories — charter school tuition, salaries, employee benefits, debt services, transportation costs and utilities, those items combined account for 90 percent of our budget,” he said.

Donato encouraged attendees to seek help from their elected state representatives for cash-strapped school districts. “If they don't send us money we're going to be in a tough spot,” he said.

Originally published May 01, 2023.

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