Upon approving a $752 million budget for 2025, Pittsburgh Public Schools board members urged district leaders to take aggressive action in changing a long-held policy diverting tax revenue to the City of Pittsburgh.
The budget, passed Monday by a vote of 8-1, includes a $28.1 million deficit. Director Jamie Piotrowski, the lone holdout, attributed the deficit to the ongoing practice, which requires the district to divert .25% of the district’s 2% earned income tax levy to the city.
For 2025, that’s expected to result in a diversion of $25.5 million.
“The district would not be facing the deficit if that quarter percentage of our earned income tax wasn't being diverted to the city,” Piotrowski said Wednesday night.
The practice, which dates back to the mid-2000s, was intended to help the city avert financial collapse while in the state’s oversight program for financially struggling cities, also known as Act 47. But while the city shed its “financially distressed” status in 2018, millions of dollars have continued to be diverted to the city.
Pittsburgh City Council passed a $785 million budget without increasing taxes earlier this week.
“But that is not without our help or our forced help,” Piotrowski said. “At this point, the city needs to resolve their own revenue issues and not rely on the district to fill their own gaps.”
Amending the practice, which was written into state law without a sunset clause, would require either a legislative change or a voluntary agreement with the City of Pittsburgh. District solicitor Ira Weiss said the city has not expressed interest in the latter option.
In the meantime, PPS will draw on its reserves to keep the budget balanced, decreasing the district’s coffers to $38.4 million. While that complies with the board’s fund balance policy requiring reserves of at least 5% of the year’s budgeted expenditures, early financial projections show the district could fall out of compliance as soon as next year.
A financial outlook shared with board members earlier this month projects the district could drain its reserves entirely by the end of 2027.
Those warning signs are part of the reason district leaders are considering more than a dozen school closures, though none would take effect until after the 2025-2026 school year. Consultants hired by PPS earlier this year say “rightsizing” the district’s facility footprint is necessary in the face of general enrollment declines.
While the budget does not include any school closures, Piotrowski said the diversion issue has given her pause regarding some aspects of the closure recommendations provided by consultants.
“Imagine what we could do with that $25 million,” she said.
School board members opted not to raise taxes, citing a need for other solutions to the district’s looming deficit. School board president Gene Walker named recovering the tax diversion and a countywide property reassessment as two possibilities.
The district sued the county this spring in an effort to compel a court-ordered reassessment. As of December, the lawsuit remains ongoing.
“The root cause of lots of our issues are not and should not be burdened on our taxpayers without us having taken the time to actually determine a fix for some of these causes,” Walker said.
Lifting residency requirements for staff
School board members also ratified a slate of contracts with the Pittsburgh Federal of Teachers. The labor agreements lift a decades-old provision requiring the district’s paraprofessional, technical and clerical employees to live within Pittsburgh city limits.
While paraprofessionals are paid far less than teachers in the district, they are required to live within city limits, where Black and low-income earners are often squeezed out due to limited affordable housing options.
Union leaders have long urged the district to lift the mandate, especially as PPS continues to struggle to fill many positions that fall under it. According to district leaders, PPS is projected to face 172 vacancies at the start of 2025.
Board vice president Devon Taliaferro voiced some concern about the change, noting that it’s important for students to see educators coming from their own communities and relating to their lived experiences.
She ultimately supported the change “with the hopes that people will make choices to live in this city, live in the communities that our students come from every day to be able to know the same burdens and struggles that they have, or the joys and the things that they celebrate in community.”
But union president Billy Hileman said that students first need fully-staffed schools.
“So right now, in terms of concern for students, they need a fully staffed special education program to provide the services that all the children in that program are owed,” Hileman said. “And with the residency requirement, there is a barrier to being able to do that.”
The contract for teachers and other professional employees passed with 82% voting to approve the contract. The new contract raises their pay by $1,500 to $2,650 annually and increases substitute teacher wages.
Paraprofessionals, who approved the contract with similarly high margins, agreed to 4% salary increases for the contract’s first year.
“We deliberately built-in higher percentages for lower wage earners and used dollar amounts for many of the professional employees to move salaries in an even way and also a fair way for everyone who we represent,” Hileman said.
