Pittsburgh Public Schools board raids reserve fund to close 2025 budget deficit

The Pittsburgh Public Schools board on Wednesday approved a 2025 spending plan that includes no tax increase but relies on the district’s financial reserves to balance the budget.

The nearly $775 million budget will draw about $28 million from the district’s reserve fund to fill in the gap between projected spending and revenues.

Projections show the reserve fund ending the year at $66 million.

Board member Jamie Piotrowski, D-Carrick, was the lone dissenting vote.

Her opposition stemmed from concerns over a 20-year-old provision that diverts 25% of the district’s earned income tax revenue to the city of Pittsburgh.

That will amount to more than $25 million next year.

The diversion — which was created by the state legislature with no sunset date — was implemented in 2004 while the city was financially distressed. But even after the city exited Act 47 distressed status in 2018, the tax diversion remained, something Piotrowski said officials should reconsider.

“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 during Wednesday’s meeting.

An extra $25 million, Piotrowski said, would buoy the district’s budget and potentially allow officials to take a different approach to consolidation plans that propose to shutter 14 schools in the coming years.

Piotrowski’s concerns come as Pittsburgh Public Schools faces serious fiscal challenges. Financial projections included in the 2025 budget show the district’s fund balance could slip below the required 5% threshold as soon as 2026.

But the City of Pittsburgh also is contending with financial woes as revenues are declining, federal covid-19 relief money is drying up and a tax levied on out-of-town professional athletes and performers faces legal challenges.

Olga George, a spokeswoman for the city, said Pittsburgh needs the tax diversion to maintain a balanced budget, at least until a countywide reassessment occurs.

Pittsburgh City Council earlier this week approved a $665.6 million operating budget and $120.6 million capital budget, holding the line on taxes, avoiding layoffs and trimming spending in 2025.

“The city needs to resolve their own revenue issues and not rely on the district to fill their own gaps,” Piotrowski said. “They have just as much of an ability to raise their own taxes or cut their own programming if they wanted to.”