PFM warns Scranton faces structural deficit by late decade unless recurring revenue found

PFM technical advisors told the Scranton School District Budget & Finance Committee on Jan. 22 that updated five‑year projections show a structural gap emerging over the next several years unless the district secures recurring revenue or finds sustained savings.

"A negative net operating result begins to form in 2025," said Brianna (Brie), PFM senior analyst, and she warned that under the baseline scenario the total fund balance becomes negative by 2027 and reaches roughly negative $16 million in 2028. Bree attributed the trend to three drivers: ESSER‑funded expenses rolling into the general fund starting in 2025, increased healthcare costs, and staffing added for the intermediate school schedule.

PFM also modeled a scenario that applies annual Act 1 index tax increases beginning in 2025. "In this version of the projections, you can see that the district is able to manage expenses in 2025," PFM's Ian Tyson said, but he added that even with those allowable increases expenditures begin to outpace revenue later in the decade.

Presenters and board members discussed management options. PFM recommended short‑term measures such as using vacancy savings, deferring nonessential capital purchases and pursuing recurring savings from benefit‑management partners; the firm also encouraged pursuing one‑time grants to reduce borrowing. Finance staff noted feasibility‑study results and possible borrowings of about $30 million in 2025 and again in 2027 tied to capital needs.

The presentation closed with PFM urging the board to pair short‑term operating controls with continued advocacy for state funding changes so the district can restore programming without compromising long‑term fiscal health.