$16.9M of Red Ink at Start of School Board Budget Process

The Bethlehem Area School District began its lengthy budget process this week with a projected shortfall of $16.9 million in revenue as compared to operating expenses for the 2014-15 school year.

The $242 million tentative preliminary general fund budget that school board members got a look at during a Finance Committee meeting Monday night—and available online— includes no tax increase, though that appears destined to change.

Under the provisions of Pennsylvania Act 1, the district is allowed to increase real estate taxes by 2.6 percent without any special permission from the state, the courts or voters.

However, according to a presentation district administrators gave to the school board—also available online—the district believes it is eligible to increase taxes by more than 5 percent by applying for exceptions based on the increasing costs of special education and pension obligations.

The increasing pension costs are identified by the district as one of the primary drivers of the $16.9 million shortfall. Those obligations are projected to increase by $4.4 million during the next fiscal year, pushing the annual cost to $20.7 million.

Charter schools are an even bigger factor, according to district officials. They alone are expected to account for a $6.7 million increase in costs and $20.5 million in total expenses.

Charter schools are privately run schools that are often free to the students who attend, but cost the district a tuition fee that comes out of the general fund.

Act 1 compels districts seeking tax-raising exemptions to apply for them with the Department of Education or the Court of Common Pleas by Feb. 27, according to this district calendar of the budget process.

The school district is currently scheduled to adopt a preliminary budget on Feb. 10. But a lot of work to trim the current projected deficit will be done between that point and the end of June, when all school boards must adopt their final budgets.

“Our job is to take that 16.9 [million dollars] and start to work it down piece by piece,” Superintendent Joseph Roy was quoted as saying in The Express Times.