A fragile school-district truce in Chester County

Straddling the western border of Chester County where the imposing mansions of the Philadelphia exurbs surrender to rolling hillsides and lush green horse farms, the Octorara Area School District is situated in one of the region's most pastoral settings.

It also has been a battleground, where property owners have learned that open space can come with a price. With thousands of acres designated as "farmland," which receive significant tax breaks, the district has some of the highest property tax rates in the region.

But after an era of sharply rising levies and taxpayer agitation, administrators have promised something for 2014-15 that residents of the 2,550-student district are not used to: A fiscal cease-fire.

District officials say Octorara - with the highest school-tax rate in Chester County after a spike of 68 percent in the last decade - has enough surplus to stave off a fresh increase.

"Our taxes are still high," said Thomas Newcome, longtime superintendent of the district, which has an 83 percent graduation rate and above-average state scores in math, reading, and writing at the junior-senior high school.

"We are a poor rural school district with a low tax base and all the requirements of all the districts that are wealthier, and it all falls on our homeowners, so that hasn't changed."

Spread over 93 square miles, the district encompasses eight towns, including two in Lancaster County, which stand to get a slight tax decrease.

School officials and activists agree that although the tax news is good, it speaks to a new normal for many of Pennsylvania's beleaguered school districts - that after five years of tax increases and contentious spending cuts since the 2008 financial crisis, schools have reached a fragile equilibrium.

Newcome said Octorara was using $1.4 million of its reserve to stave off tax increases, and was avoiding program and salary cuts. Overall, its $48 million proposed 2014-15 budget represents a 1.8 percent increase.

"I really think that we need to take a hard look at these increases in the budget and pull them back," said Timothy Alexander, a low-tax activist who was elected to the school board last year.

John McCartney, 79, who runs the Ches-Lan Anti School Tax Association, says he pays $5,900 a year in school taxes on a house that's worth about $200,000. He supports bills that would eliminate property taxes in Pennsylvania and replace them with state funding, which would be drawn from increases in sales and personal-income taxes.

"It's not just that higher taxes are an inconvenience, they are putting people out of their homes," said McCartney, who has lived in Christiana, Lancaster County, for 27 years.

District officials said mandated employee-retirement costs were applying budget pressures, and Alexander said he understood a fundamental fiscal reality:

"We have Chester County costs, but basically Lancaster County home values. That causes relatively higher taxes," he said.

With so much attention on the school-funding crisis in Philadelphia, the City of Chester, and other urban, poverty-wracked districts, the root of the long-term budgetary problems in a community such as Octorara are starkly different: Its abundance of green, picturesque farms.

More than $100 million worth of acreage in the largely rural district have been classified as the type of farmland - larger than 10 acres or producing at least $2,000 a year in farming income - that is taxed at reduced rates under Pennsylvania law. That has helped put a tight squeeze on Octorara's mostly middle-class residents.

The discount accounts for "$6 million being shifted from farmers to other property owners," Alexander said.

An Inquirer survey last year found the property tax bill for the typical Octorara homeowner had risen by $1,700 in the last decade - the fourth-highest rate of increase among 68 districts in Southeastern Pennsylvania. Although Chester is now the wealthiest county in the state - largely a result of rapid suburban-style growth in its eastern half - that type of upscale sprawl for the most part hasn't lapped over into Octorara's territory, which is closer to Lancaster than Philadelphia.

Alexander, who is also a real estate agent, said the district had counted on a home-building boom and a rise in student population that never materialized.

"One of the issues that I believe is the problem is the overbuilding of the campus," he said, noting that some $6 million of the budget was debt service for projects such as an intermediate school built in 2007 and an expansion of the high school in 2011.

Some district activists are calling for a consolidation of the district's underused schools and possibly salary cuts to keep future costs in line.

Alexander noted that though district officials had been able to hold the line for now, that's "because they're using $1.4 million of reserve money."

@kathyboccella