NASD seeks to reduce tax hike
The Northampton Area School District administration is trying to create the right recipe to reduce the 2018-19 district budget tax hike.
The NASD administration presented proposals to the board of education April 9 that would lower the tax hike to 2.88 percent, down from the 3.9-percent hike approved by school directors.
Among the proposals is to eliminate The World of Baking elective course in the family consumer science program for ninth grade. The course and teacher would be replaced by a Spanish course and teacher.
The 2.88-percent tax hike, which is under the state-mandated 2.9-percent increase mandate, would increase millage by 1.52 mills, which is down from the 2.06-mill hike approved by the board.
“We had to cut almost $585,000 from the budget or find revenue somewhere else,” NASD Superintendent of Schools Joseph S. Kovalchik told the board.
Under the administration’s updated budget, the expenditures increase would be reduced by $584,942, from $2,231,450 to $1,646,507. Fund balance use would stay at $3,820,000, which includes $400,000 from the district committed fund balance and $3,420,000 from the unassigned fund balance. Based on the average NASD assessment of $58,223.43, the average 2017 district tax bill is $3,072.45.
The administration is proposing a 1.52-mill hike, from 52.77 mills to 54.29 mills, with an annual tax bill of $3,160.05 — or an increase of $88.50 annually, $7.37 monthly and $1.70 weekly.
That compares to the previously approved preliminary budget, which had a 2.06-mill hike, from 52.77 to 54.83 mills, with an annual tax bill of $3,192.39 — or an increase of $119.94 annually, $9.99 monthly and $2.31 weekly.
The school board’s 8-1 vote Jan. 22 approved a preliminary budget with expenditures of $107,532,563 and revenue of $101,481,113 for a deficit of $6,051,450, with an increase of 2.06 mills from 52.77 to 54.83 mills, for a 3.9-percent increase, which exceeds the 2.9-percent increase allowed NASD under Act 1.
The preliminary budget includes a contingency fund of $400,000 and a special education contingency fund of $75,000.
The reduction proposed by the administration April 9 is still not enough for NASD Board of Education President David Gogel.
“I’m hoping to get [the tax hike] to 2 percent,” Gogel said after the meeting.
To achieve that, Gogel would reduce the budget’s contingency fund from $400,000 to $200,000.
“I’m just wondering if $200,000 is enough for contingencies,” Gogel said during the meeting.
It was stated the district used about half of the $400,000 contingency budget in each of the past two years.
To get to a 2-percent tax hike, Gogel said he would also utilize more money from the district fund balance.
During the meeting, Gogel requested a timeline of the fund balance from NASD Business Administrator Terry Leh.
“I would like to see the fund balance history,” Gogel said during the meeting.
It was stated the $3.8 million use of the fund balance for the 2018-19 budget is the highest-ever use of the fund balance.
“Show how the fund balance has evolved over the years,” Gogel explained after the meeting concerning what he is seeking from Leh.
Gogel said taxes from approved and pending commercial development in the district could offset a fund balance reduction.
“Taxes from real estate will put the fund balance back up,” Gogel said after the meeting. “That’s what I’m thinking, even though it would drop below the 5 percent.”
The Pennsylvania Association of School Administrators and Pennsylvania Association of School Business Officials recommend a school district maintain an unassigned fund balance of a minimum of 5 percent and a maximum of up to 10 percent of operating expenditures.
NASD’s fund balance is 5.02 percent, it was stated at the April 9 meeting. It might dip to 4.9 percent.
Discussion of the district budget is expected to continue at the 6:30 p.m. April 23 school board meeting in the administration building, 2014 Laubach Ave., Northampton.
After the meeting, Kovalchik said a straw vote — a nonbinding poll — of board members would be taken at the April 23 meeting to give Leh guidance in honing the proposed district budget, for which a vote is scheduled for its adoption at the 6:30 p.m. May 7 board meeting, also to be held in the administration building.
The final budget is scheduled to be advertised by June 1. Adoption of the final budget is scheduled for the 6:30 p.m. June 11 school board meeting.
The school board approved the preliminary budget Jan. 22 and also authorized the NASD administration to seek approval from the Pennsylvania Department of Education (PDE) for exceptions allowed under Act 1 that allow the district to increase the rate of tax for fiscal year 2018-19 by more than the 2.9 index.
In their April 9 presentation, Kovalchik and Leh said PDE approved the district’s request for a special education expenditure exception of $943,250.
“That’s how high you can exceed your budget,” Kovalchik said. “We don’t plan on doing that.”
The district was not eligible for retirement exceptions for the 2018-19 budget.
During his and Leh’s April 9 presentation to the school board, Kovalchik said four specific budget-item increases are driving the overall 2018-19 increase: special education, $457,000; Pennsylvania State Employees’ Retirement System (PSERS), $1,307,197; charter/cyber school expenses, $150,000; and health care, $620,168.
Kovalchik said the actual annual cost of charter/cyber schools in the district budget is $3.3 million.
“Charter schools are not free, contrary to what some people say,” Kovalchik said.
Leh and Kovalchik listed changes to the 2018-19 budget that have occurred since their first budget presentation Jan. 10, including Colonial I-U 20 budget increase, $298,900; Bethlehem Area Vocational-Technical School budget increase, $33,314; NASD professional staff increases, $51,800; and one-to-one instruction increase, $43,100; and decreases, including replacements and/or changes in staffing, $296,200; support staff retirements, $18,200; local revenue increases, $240,000; district school building budget reductions, $121,100; and technology reductions, $319,000.
Kovalchik said he and Leh have not included potential tax revenue in the budget from approved commercial development.
The NASD administration has factored in The World of Baking class.
“You’ll see 300 ninth-graders who want to take The World of Baking,” Northampton Area High School Principal Robert Steckel said.
Steckel said he believes it’s more important for students to take first-year Spanish in ninth grade.
“There’s growing interest in Spanish,” he said. “The World of Baking is a true elective.”