Public Relations > News: Contract Negotiations > Fund Balance Can't Be Used to Pay for Teacher Contract

Fund Balance Can't Be Used to Pay for Teacher Contract
The SAEA has suggested that the district will be able to pay for its proposed salary increases by tapping into the fund balance. The Souderton Area School Board is reserving this money for the following purposes:

Capital projects - Capital projects are facility improvements that are one-time expenses. Using the fund balance for projects like these means the district, in some cases, is able to avoid raising taxes for such expenditures.

Anticipated PSERS expenses - In three years, the district will be required by the state to pay a substantially higher contribution rate for the Pennsylvania State Employee Retirement System (PSERS). The district has been setting money aside to soften the impact that this increase will have on the budget in the future.

Unexpected costs — Just as any family sets aside a portion of their income for emergencies, the school district reserves a portion of its budget for unanticipated items.

Associated high school costs — Though construction costs for the new high school are being paid through a bond, when the school opens the district will need to pay for items such as furniture and other “soft costs” associated with a new building.

In effect, the fund balance is used for one-time expenses or to offset the impact of large budgetary increases in certain years. Using the fund balance to pay for an ongoing expense, such as teacher salaries, would be fiscally irresponsible. It would be like using one’s savings to pay for a monthly bill—eventually the money in the savings runs out and the payment has to come from some other source. Once the fund balance is spent, the district would have to find a way to replenish it and to continue paying for its contractual obligations. This would likely lead to a large tax increase and possible cuts to programs and staff.