Administrators and board members listen to public comments during the School District of Lancaster Board Committee meeting at McCaskey East high school in Lancaster Tuesday, September 8, 2020.

All but three Lancaster County school districts have decided to raise taxes this year as they navigate uncertainties surrounding the COVID-19 pandemic, attempt to fill positions with a shrinking pool of applicants, and meet financial obligations ranging from the rising cost of employee benefits to cyber charter school tuition.

School officials said they’re also making up for revenue they missed out on last year, when more than half of county school districts declined to raise taxes.

Columbia Borough, Donegal and Warwick are the only school districts that did not raise taxes this year. This is Columbia and Warwick’s second year in a row with a property tax freeze.

The decision from many schools to raise taxes comes as administrators and school board members contemplate ways to use pandemic relief money that’s been flowing in since summer 2020. That money, school officials said, can’t simply be used to offset tax increases, because they are temporary funds, and there are certain parameters when using the funds, such as using the money to target learning loss and addressing students’ mental health.

The federal government has awarded county school districts nearly $206 million in pandemic relief grants through the Elementary and Secondary School Emergency Relief, or ESSER, fund since last year.

Meanwhile, most county school districts have padded their rainy day fund since last year, a move school officials said is necessary to prepare for the potential for ballooning costs stemming from the pandemic.

County school districts have added more than $52 million to their rainy day fund, according to school district budget documents from 2020-21 and 2021-22. For the purposes of this article, a rainy day fund would be a school district’s fund balance plus any reserves left in the budget.

“I very much empathize with property taxpayers,” said Nathan Benefield, vice president and chief operating officer for the Commonwealth Foundation, a right-leaning think tank based in Harrisburg.

“It’s kind of been the trend for years and years that regardless of increased state funding that property taxes will still go up,” Benefield said, referring to the 2021-22 state budget’s historic investment in education funding.

Preventing another budget deficit

Lancaster County schools received a $10.3 million, or 5.5%, increase in basic education funding this year, including a combined $2.9 million Level Up supplement for School District of Lancaster, Columbia Borough and Ephrata Area.

Lancaster raised taxes by 1.75% this year. Its 22.6731 millage rate is the county’s highest other than Columbia Borough (26.46) and the Lancaster County portion of Octorara Area School District — Christiana and Sadsbury Township (25.8).

School District of Lancaster chief financial and operations officer Matt Przywara said the school board voted to increase taxes to, in part, prepare for when the ESSER money runs out in a couple years.

Some of the ESSER funds this year went toward a $10 million budget deficit. Other uses for the ESSER funds include supplemental services to address learning loss and ventilation upgrades.

“All those funds are not just to put back in your budget and say, ‘OK, let’s not raise taxes,’” Przywara said. “When these funds dry up, we’re still going to be left with a structural deficit.”

Lancaster’s rainy day fund increased $10.2 million, or 60%, from the 2020-21 budget to 2021-22. Przywara said the increase is partly because the school district didn’t incur as many contractual costs, such as transportation and substitute teaching, due to remote learning last school year, leading to an unexpected rise in fund balance and reserves.

The school district also saved cash for four major building projects it still plans to complete, Przywara said. That includes renovations and possible additions to Wheatland Middle School and Hamilton, King and Burrowes elementary schools.

The school district is also bracing for a potential pandemic-fueled rise in supplies and building material, Przywara said. It’s also trying to compete for students with cyber charter schools looking to siphon off students from traditional public school and compete for workers in a private sector that is beginning to aggressively raise wages, Przywara said.

‘When that money runs out, there’s a cliff’

Like School District of Lancaster, Penn Manor had to use ESSER money to fill a $3 million budget deficit this year, according to district business manager Chris Johnston. That’s after a nearly $4 million deficit last year, Johnston said.

“Last year we had no tax increase because of the pandemic,” he said. “So we had to forgo potential revenue that would have cut that down.”

As for the remaining ESSER funds, Johnston said it’s not wise for school districts to fund current expenditures. You’re “artificially creating (an) even greater structural deficit,” he said, because, “when that money runs out, there’s a cliff, and you need to make that money up.” That money is meant to go toward things like remote learning, personal protective equipment, tutoring, HVAC upgrades and more, Johnston said.

Penn Manor’s rainy day fund from 2020-21 to 2021-22 have grown 20%, or $2.8 million. Johnston said that is expected to fund facility repairs like what’s left of the $100 million high school renovation project, and technology.

Increased costs, staff shortages

At Solanco, the county’s largest school district in geographic size, property taxes increased by 3.5%, the largest tax hike in the county. Solanco’s millage rate, 11.344, remains the lowest in the county, with the closest being Eastern Lancaster County’s 12.85.

Solanco business manager Sandy Tucker said the tax increase was necessary to recoup lost tax revenues from last year and prepare for supply shortages as well as staff shortages.

The school district expects to contract or hire additional workers to provide mental health and behavioral health services, as well as tutoring services, after-school programs and summer camps. The ESSER funds and tax hike will help with that, Tucker said. Maintaining technology costs is also a priority, she said.

Solanco’s budgeted rainy day fund nearly doubled from last year, growing by $4 million to around $8.6 million. Tucker said the uncertainty from the pandemic, including reduced operating costs last year, played a role in that.

The district is also setting money aside for growing expenses like increased salaries and benefits for employees as well as increased costs for paper and building upgrades, Tucker said.

Recruiting competent workers is particularly expected to be a struggle, she said.

“Like every other company — no matter if you’re a school district or a regular (company) — we’re all trying to grab the workforce that’s out there, because it’s shrunk,” Tucker said. “When we have less supply, the price goes up.”

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