East Penn SD reviews long-range fiscal, capital plan; board asks for mid-range millage scenarios

Mr. Sall, East Penn School Districtfinance officer, gave a 30-minute overview on March 11 of the districtlong-range fiscal and capital plan, summarizing five years of audited results, current-year estimates, the proposed 2024-25 budget and four-year projections.

He told the board that local revenues are running about $1.5 million above budget (including roughly $357,000 in earned-income-tax collections, about $1,000,000 more in interest earnings and roughly $130,000 extra in IDEA payments). State revenues are about $750,000 below expectations; net, he said, the districtis approximately $3,250,000 better than budgeted for the current year. On the expenditure side he reported wages about $838,000 under budget, benefits about $882,000 under and charter and cyber tuition roughly $650,000 over, producing a combined positive variance approaching $2 million.

"You can look at total revenues, total expenditures and whether we're planning for a surplus or deficit," Sall said, urging the board to focus on ending fund balance and months of expenditures as bond-rating metrics.

During the presentation, Sall corrected an earlier misstatement: the projected deficit for the current year is a negative $176,000, not $1.7 million as he had briefly misstated.

Sall walked through assumptions used in the forecasts: many series were based on seven-year averages, while some lines deviated from averages for prudence. For example, interim real-estate taxes were held flat (0%), earned-income-tax growth was reduced by 0.25% annually in later years, transportation contract increases were modeled at 4% rather than a historical 6% and interest income was not assumed to remain at current high rates.

The plan also incorporates the K-to-8 realignment millage phase-in. Sall said the 2024-25 proposed contribution to capital reserve was $4.6 million but that about $2.3 million of capital spending is planned for the year, leaving a net contribution of roughly $2.2 million. He cautioned that some previously listed IRE and LMMS capital expenses were removed from the cost column pending realignment.

Sall presented scenario and sensitivity analyses to illustrate the long-term impact of different tax choices. "If we combine a 0% tax increase for 2024-25 with 0% in the future, you would be $67,000,000 in the hole," he said, noting the example was meant to show sensitivity rather than a recommendation.

Board members pressed for additional scenarios that sit between the existing examples. Dr. Whitney asked whether the charter tuition assumptions reflected legislative change or trendlines; Sall said the plan used current reality and trend data. Several board members, including Ms. Bowman and Mr. Smith, requested intermediate millage scenarios (for example 3% or 4%) and one that shows the projected tax impact with proposed priorities removed so the board can see the "wiggle room" without cutting programs. Sall agreed to prepare additional scenarios for the next presentations.

The presentation concluded with supplemental pages showing homeowner impact calculations: using the Lehigh County average home value of $215,032, Sall estimated a 5.95% tax increase would add about $258 per year to the average tax bill.

Next steps: the board will hear additional budget-priority presentations later in March and April; final proposed and adopted budgets are scheduled for the April and June meetings, respectively.