Pittsburgh Public Schools’ 2023 budget stabilizes district for another year, future funding still uncertain

After initially predicting it would run out of funds by the end of next year, the Pittsburgh Public School District is now preparing to pass a budget that will keep them afloat through at least 2023 without raising taxes.

However, about $61 million in federal funding for COVID-19 relief from America’s Elementary and Secondary School Emergency Rescue Plan has been allocated to bolster it. But that will soon dry up, leaving school officials with a tough choice.

“Regardless of ESSER’s funding, our cost drivers remain the same,” says CFO Ronald Joseph Pittsburgh City Paper. “The real cost of charter schools has gone up. We have rising mandatory costs at the government level, such as our superannuation compensation which has increased. We have rising costs everywhere, and our costs are growing at a faster rate than our revenues are growing.”

The PPS 2023 Preliminary Budget of USD 675.9 million was published on November 23. It projects an operating deficit of $9.2 million, which would reduce the unreserved fund balance to $59.1 million by the end of 2023.

Last year, the district produced a presentation deficit assuming that its reserves will run out by 2023 unless school officials can find a way to cut costs or increase revenue.

ESSER funds, available through 2024, help protect the district from the worst effects of rising costs. Along with this, in 2022, budget reserves were also formed in the district and tax increases were carried out.

Joseph’s strategy for using ESSER funds was to limit long-term investment costs in order to prevent a drop in funding in the future. Instead, he says, the funding is mostly allocated to one-time costs such as enrichment programs to address lost learning and technology and building upgrades.

“We deliberately didn’t use it just to buy a whole bunch of staff, because we know that if we don’t target specific interventions and programs, then at the end of the funding we’re going to fall off a cliff and not have the means to continue that spending.” ,” says Joseph.

Yazep says that the district’s financial difficulties began in 2011, when revenues from the state decreased significantly. Since then, continued price increases have added to the problems, Joseph says.

“Now we’re always at a point where our costs are growing at a rate that exceeds our projected revenues, so it’s a structural deficit,” says Joseph.

One of the main factors of the district’s structural deficit is the decrease in the number of students. As a result, state-invested revenue is down, and charter school spending is up.

Staff salaries and charter school costs make up 66% of the total 2023 appropriation, with charter schools costing about $120 million in PPS and personnel costs about $329 million. This is coupled with increasing demands on the general fund that are outpacing student enrollment growth.

School board members are going to vote on the budget at the December 21 parliamentary session. Nothing has been announced regarding future decisions to address the district’s ongoing budget challenges, but there are many options for district board members to consider.

Efforts to increase revenue

To address future funding challenges, the county may have some options to increase revenue streams, but Joseph warns that could ultimately be problematic.

“This is not the game we are playing at all. There are ways we could make a profit, but it’s about who we charge,” says Joseph. “The main service we offer is education and we don’t charge our residents for education because it’s free public education and they already pay indirectly through taxes.”

In recent years, the district has sold unused buildings to generate revenue, but that, Joseph notes, is not sustainable. The district also recently implemented a program using cameras on buses to help fine drivers who illegally go around stopped school buses. Some revenue will be generated from the program, but the average revenue per year is unknown.

Alternatively, the district could try to invest in enrollment efforts or continue to petition the city to return to its previous payroll tax formula, which would have provided PPS with about $20 million.

In 2005, Pittsburgh reformed the payroll tax formula to address the city’s financial difficulties at the time. Town residents paid a 3% payroll tax and 2% went to the school district. After the reform, only 1.75% went to school. In 2021, the school board requested that the formula be converted because the city’s financial difficulties had passed and the city was proposing to keep the district in financial shape, but the city resisted refunding the funds.

Efforts to reduce costs

Limiting the district’s spending may be a more palatable option for the budget in the next couple of years, but Joseph is loathe to offer options before the board indicates what action it wants to take.

Given that legacy and structure costs already consume a significant portion of the budget each year before funding can be manipulated to meet the district’s goals, there are limited options for how the district can reduce costs while maintaining its educational initiatives.

With staff growth not keeping pace with student growth, staffing is a possible solution. School closures to sell buildings and consolidate resources are also likely.

“I can say that these discussions have to happen between the board of directors, and I assume that these discussions will be held in public,” Joseph said. “Any plans we have to address our projected shortfalls will be discussed publicly and will require a lot of stakeholder input.”

PPS CFO Ronald Joseph said there have been no major new investments or budget cuts due to the recent transition in district leadership from previous Superintendent Anthony Hamlet to Dr. Wayne Walters.

“Now with this kind of unchanged leadership, we can expect more changes in the future because we need to address this issue. But this year, this budget has only been about maintaining services, not major new investment or cuts, just maintaining the services we need to provide for our students.”