There are many challenges in negotiating a contract. To complicate matters, our district is dealing with decreased state funding ($750,000 over the past four years) and increased competition from cyber schools. Cyber schools cost Towanda Area School District $176,350 for the 2013-14 school year. In addition, school districts are bound by Act 1 regulations. Last year we were allowed to raise taxes by 1.17 mills (2.9%), or the equivalent of $234,424 dollars. These additional tax dollars do not come close to the increase in expenses in the budget.
What worked in the past can no longer be our present reality. This fact applies to the way we need to negotiate our contracts just as much as it applies to how we deliver our education.
Here is an overview of the key points:
Towanda Area School District has been attempting to settle a contract with Towanda Area Education Association since January of 2013. The contract expired September 1, 2013.
Under the current contract, the starting salary for teachers is $49,839, the maximum salary is $77,115 and the average is $63,184. This does not include any supplemental contract salaries such as coaches, advisors, etc.
Approximately 43% of the district’s budget comes from local sources.
The Act 1 index, which restricts taxing levels, has been set by the state at 2.9% for 2014-15. A 1.17 mill tax increase yielded an additional $234,424 in tax revenue, which resulted in the median taxpayer household increase of $27.14 per year in real estate taxes.
Growing financial obligations to the state’s retirement fund, coupled with increased salary and health benefits costs, are making it difficult to balance the budget.
Due to declining investments and deferred payments over the past several years, the Pennsylvania School Employees Retirement System (PSERS) has lost a significant amount of money. Towanda Area School District budgeted $1,646,005 for the 2013/14 school year. Below is Towanda’s estimated cost for PSERS during the next four years.
| Year | Estimated Costs | Estimated Rate |
| 2014/15 | $2,088,058 | 21.4% actual rate |
| 2015/16 | $2,590,616 | 25.84% |
| 2016/17 | $3,015,193 | 29.27% |
| 2017/18 | $3,201,839 | 30.25% |
Total estimated cost increase from 2014/15 to 2017/18 is $1,113,781
Towanda is very fortunate to have a fund balance, which is very much like a savings account. It would be fiscally irresponsible to use the fund balance to settle the teachers’ contract, as TAEA has suggested, because it is being reserved for capital projects, PSERS expenses, health care and unexpected expenses, including rising special education expenses.
The school board is an active and engaged part of the negotiation process. At least three members of the school board participate in the process, and board members are given regular updates.
Health care costs: Below is the annual estimated cost per family for health care if we were to remain on the current PPOB plan. This is the cost for family coverage for the PPOB plan.
| Year | Annual premium cost per employee with family coverage | Employee Annual Premium Cost |
| 2014/15 | $17,711 | $1,771 |
| 2015/16 | $19,483 | $1,948 |
| 2016/17 | $21,431 | $2,143 |
| 2017/18 | $23,574 | $2,357 |
This is using an estimated 10% increase each year
Towanda Area School District cannot continue to bear the burden of these health care plans costs.
Towanda Area School District and Towanda Area Education Association are pursuing fact-finding. During fact-finding, a neutral third party, called a fact finder, is appointed by the Pennsylvania Labor Relations Board. This individual examines both the school board’s proposal and the teachers’ union proposal. The fact-finder then issues a non-binding report containing recommendations for a contract.
Steven Gobble
Superintendent