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Pittsburgh Public Schools scrambles to address pending financial crisis | The Homepage

In addition to closing schools, the district has filed a lawsuit to force Allegheny County to reassess properties.

By Ann Belser

Pittsburgh Public Schools has embarked on a multi-pronged quest to right the schools’ finances. The district foresees a bleak financial future in which there won’t be enough money for operations in 2027.

Chief Financial Officer Ronald Joseph said that in 2026 the district will use up its savings to balance the budget. He has said this in presentations to the Board of Directors of the Pittsburgh Public Schools. He has made this point during the preparation for the upcoming school year budget and while talking about the need to reduce the number of school buildings in the district.

In addition to closing schools, the district is turning to property taxes.

While the schools levied a total of $191.6 million in real estate taxes in 2023, the owners of commercial office buildings that have faced vacancies since the pandemic have successfully won tax reductions of $4 million. Mr. Joseph said the schools also may be forced to return $7.4 million that the commercial landlords have argued was improperly charged for 2022 and 2023.

And the district must pay charter school tuition rates $25 million higher than it budgeted for in 2023.

The bottom line means a deficit of $23 million for 2024.

The district’s fund balance, which is money set aside for lean years or those with spending emergencies, will be gone by 2026 if changes aren’t made to the district’s finances.

“Our forecast is grim. We are projected to deplete our fund balance by 2026 if we do nothing to address the financial realities that lay before us,” Mr. Joseph told the board of directors during a recent meeting on developing a plan to close schools. “Our fund balance has been on a downward trajectory since 2016. This means we have been consistently using our fund balance to supplement our operations.”

“Make no mistake, we’re at a crossroads where some hard, perhaps uncomfortable, decisions need to be made,” Superintendent of Schools Wayne Walters said during the April 3 meeting. “They’re decisions necessary to keep our district afloat and ensure our students receive a quality education they deserve.”

One of those decisions was to file a lawsuit against Allegheny County to force a reassessment of properties throughout the county. The county is still levying taxes based on assessments set in 2012 after a 2005 lawsuit. The decision in Clifton vs. Allegheny County forced a countywide reassessment.

Reassessments are not popular among politicians.

During his tenure as Allegheny County Chief Executive, Rich Fitzgerald would remind residents at community meetings that the elderly widow living in Lawrenceville, who paid $300 in county real estate taxes in 2013, was still paying the same amount in 2023 when he left office.

The school district, along with residents who have filed separate cases, is arguing in the lawsuit against the county and current County Executive Sara Innamorato that using 2012 values to determine taxes is a regressive form of taxation.

“Each year, it shifts tax liability away from properties that are appreciating at a faster-than-average rate over to those that are either appreciating at a slower-than-average rate, maintaining their value or declining in value,” the lawsuit states.

For example, a property in Upper Lawrenceville, which is assessed at $62,000 with a county tax bill just under $300, last sold for $280,000 in 2015 with no change in the assessment. It is now for sale for just under $700,000, more than 10 times its assessed value.

Another house in Homewood with a $34,200 assessment and a tax bill of $83, is currently for sale for $230,000 or 6.7 times the assessed value, which means the owners pay a relative value in taxes that is more than 30% higher than the owners of the Lawrenceville property.

The school district’s lawsuit, filed by solicitor Ira Weiss, includes a quote from the state Supreme Court’s 2009 decision that forced the last reassessment: “The disparity is most often to the disadvantage of owners of properties in lower-value neighborhoods where property values often appreciate at a lower rate than higher-value neighborhoods if they appreciate at all.”

The district’s lawsuit states the International Association of Assessing Officers’ standard for determining assessment uniformity calls for an average deviation from the median assessment to be between 5% and 15% for homes and condominiums. But in Allegheny County that was nearly 20% in 2022, based on a study by the Pennsylvania State Tax Equalization Board.

In a statement released with the lawsuit, Mr. Weiss said the school district asked Innamorato to conduct a countywide reassessment. “She has replied with the same general statements about more ‘review and study.’ The time has passed for that.”

Mr. Weiss also blamed Ms. Fitzgerald’s administration: “The refusal of the county’s last administration to have a reassessment in 12 years has created an assessment system that is now broken and in violation of the Uniformity Clause of the Pennsylvania Constitution.”

He added, “The bottom line is that the district cannot pay tens of millions of dollars in refunds. It also cannot sit idly by and watch the tax base literally disappear every time there is a wave of reductions and refunds due to the collapse of the assessment system in this County,”

The lack of stability, he said, threatens the early childhood preschool program and other vital school programs.

While not specifically addressing the lawsuit, Abigail Gardner, the spokesperson for the county, released a statement that said “the county executive is gathering data to analyze the implications of a countywide reassessment. Any reassessment must be revenue neutral and not a backdoor tax hike for the people of Allegheny County and should protect seniors and low-income homeowners in the process.

“Ideally reassessments would be state-mandated, mundane, regular occurrences and not once per decade shocks to the system. Our preference is to work with stakeholders to build a more predictable system for everyone.”

This story originally appeared in Print, the community newspaper for Pittsburgh’s East End neighborhood. It has been shared with The Homepage, edited lightly for style and reprinted with permission.

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