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But the Penn Manor School District superintendent said those cost-saving measures might be necessary in the next few years to pay for rising pension costs.
School officials have known for years that payments into the Public School Employees' Retirement System would be increasing.
But only recently has the so-called "pension tsunami" hit home as districts prepare their 2010-11 budgets.
The bottom line: Pennsylvania and its public schools are facing a financial nightmare of historic proportions.
And taxpayers are caught in the middle of it all.
Next year, the PSERS contribution rate will jump by more than 70 percent, costing Lancaster County school systems — and taxpayers — an extra $7.5 million.
But that's just a ripple compared with the wave that will crash down on school budgets two years later, when the rate is projected to more than triple, rising from 8.22 percent of employees' salaries to 29.22 percent.
It is projected that pension costs for the county's 17 school districts will increase by a staggering $59.1 million over that period — with no relief in sight.
Contributions will continue rising, peaking at 33.6 percent in 2014-15 and remaining at 25 percent or above for the next 15 years, according to PSERS projections.
"These rates are not 'spikes.' Rather, they are more like a 'launch' because they do not come down for a long time," said Tim Shrom, business manager for Solanco School District.
What's going on?
The huge increases are necessary to help the pension fund recover from stock market losses, underpayments in previous years by school districts and the state and increased liabilities.
School officials are demanding the Legislature — which passed laws from 2001 to 2003 that increased PSERS benefits, delayed the rate hikes and cut contributions — intervene to relieve taxpayers of the financial burden.
But the state, struggling with a multibillion-dollar deficit, is on the hook, too. It contributes even more than school districts into the PSERS account and faces the same increases.
"At this point, it's a crisis that we can't just hide from," said state Rep. Scott Boyd of Lampeter. "There are no easy answers. We're going to have to do something very substantive within the next 18 months."
Solutions far off
At least half a dozen possible "solutions" to the funding crisis have been proposed, most of them calling for reduced pension benefits.
But any changes to the system would be limited, by law, to future PSERS members.
As such, they'd have minimal impact on reducing the billions of dollars in unfunded liabilities currently in the system.
And any proposal to reduce benefits faces strong opposition from the Pennsylvania State Education Association, which represents most PSERS members.
Teachers and other school employees have paid their mandated share of contributions into the system every year without fail, while the state and school districts have been underfunding the pension system by $600 million a year, PSEA officials say.
Why, then, should their benefits be cut?
"We are going to do all we can to protect our members' benefits," PSEA treasurer Jerry Oleksiak said.
But lawmakers insist something's got to give.
"We've come to a time when the overburdened taxpayer has had enough," state Rep. Gordon Denlinger of Narvon said in an e-mail.
"We face a square-off between the public-sector unions and the taxpayers of the commonwealth."
With a possible solution apparently at least a year away, school districts are bracing for the worst.
School District of Lancaster's PSERS contribution is projected to increase sevenfold, from $1.7 million this year to $11.95 million in 2012-13.
Without budget cuts, the district would have to raise property taxes by more than 20 percent — something no school board member in his or her right mind would propose — to pay for the increases.
"It's huge," Matt Przywara, SDL's chief financial officer, said of the financial impact. "For us to pay a rate of 29 percent is ridiculous. It will require extreme reductions in expenditures."
Other financial challenges
The timing of the hikes could hardly be worse.
The county's school systems are facing the loss of $41 million in federal stimulus funds at the end of 2010-11 and have experienced steep drops in revenue from investments and real estate transfer taxes during the economic downturn.
Their utility costs have risen sharply, and fixed costs for salaries and health care also are up by 4 percent or more.
The weak economy means the state is likely to continue strict limits on how much property taxes may increase under Act 1.
This year, the average Act 1 index — based on the previous year's economic statistics — is 4.8 percent.
Next year, the average drops to 3.4 percent.
Districts may exceed those rates only with voter approval or by receiving exceptions from the state on uncontrolled cost increases for special-education services and other mandated programs.
This year, they also can seek exceptions for the PSERS rate hikes, and most districts have requested that exception.
Gov. Ed Rendell has promised a healthy 8.5 percent boost in basic education funds for schools next year. But there's no guarantee they'll come through.
And continued strong state support for education — one of the hallmarks of Rendell's administration — is certainly not guaranteed after he leaves office at year's end.
Most county districts have established reserve funds to pay for the pension hikes, but they've amassed only about $19.5 million, less than a third of the increase needed by 2012-13.
Lampeter-Strasburg School District, for example, has set aside $400,000, a reserve "so small it will have no material impact on lessening the rate increases," Terry Sweigart, the district's business manager, said in an e-mail.
Some districts, such as Conestoga Valley, Ephrata and Penn Manor, have socked away enough money to get through the first few years of increases.
But others, such as School District of Lancaster and Manheim Township, have no reserves at all.
SDL board members last year debated establishing a PSERS fund in the 2009-10 budget but rejected the idea.
Creating a fund would send the wrong message to state officials, they argued, implying that school districts were willing to pay for a problem the Legislature created.
SDL board member Michael Rowen said the district likely would have been criticized by the public for establishing a reserve and imposing higher taxes to pay for it.
Huge potential tax impact
If the higher rates projected for county schools were to be funded solely with state and school taxes, each household in the county would pay an additional $500 in taxes by 2012-13.
Officials say tax increases that high simply aren't going to happen. And belt-tightening in such areas as utilities, maintenance, materials and supplies won't save districts enough money to cover the higher pension costs.
"You have to look at cutting programs," Leichliter said. "There's no other way to address it."
Within five years — barring any major changes to the pension system — Penn Manor will be paying an additional $5.5 million into the fund, Leichliter said.
"That $5.5 million means we would have to start scaling back programs that are helping children," he said.
"Do you look at increasing class sizes or scaling back support programs and other kinds of benefits that help children?"
Academic support teachers, counselors in the Student Assistance Program, classroom aides, custodians and groundskeepers all could be cut, he said.
The district also could consider a "pay to play" policy for athletics, and teachers and administrators who retire or leave would likely not be replaced.
Penn Manor's $1.5 million capital reserve fund for maintenance could disappear, Leichliter said.
"On the surface, it's an easy budget line to cut, but what it does is postpone the obligation to future superintendents and future school boards."
Leichliter, like all public school administrators, stands to receive a generous pension as a member of PSERS.
"From my perspective, even though I'm a beneficiary, changes have to be made," he said. "We can't expect taxpayers to fund this kind of increase, so I would support changes to the system."
But until change occurs — if it happens at all — the district needs to start looking at cuts.
"We're talking about administrators, teachers, aides and programs. We're talking about everything," he said.
"What we could end up with is a program that would not be nearly as effective as it could be for kids."
