Preliminary budget shows $1.15M shortfall after proposed 4.8% index; board weighs fund-balance use and cuts

District finance staff presented a preliminary FY26–27 budget showing expenditures above projected revenues and an estimated remaining budget shortfall of about $1.15 million after applying the board’s preliminarily approved Act 1 index increase (4.8%). Finance staff said the district had a fund balance of roughly $18.5 million at June 30, 2025, reduced by a $3 million transfer to capital reserve; staff project an ending fund balance near $14.3 million after the proposed budget adjustments and one-time purchases.

Key budget drivers include salary and benefit increases (healthcare and PSERS pension costs), special-education placements (outplacements and IU costs), utilities and maintenance, and charter/cyber school costs. Finance said that a blended tax increase across Lehigh and Northampton counties would functionally be about 4.32% because of county equalization rules and that would bring in approximately $858,000 in additional revenue.

Even with the proposed tax action, administration outlined a remaining shortfall of approximately $1.15 million. Staff recommended using fund balance for one-time purchases while cautioning that relying on fund balance for recurring costs risks future structural deficits. The administration also proposed adding one high-school business-teacher position in the recommended budget and continuing capital-reserve priorities already set aside.

Board members pressed for options to close the gap—attrition-driven hiring freezes, delaying noncritical one-time purchases, or other programmatic reductions—and asked administration to return with prioritized line-item recommendations to meet the board’s guidance. Several members urged that recommendations be a two-way street: the board will set strategic priorities and administration will propose specific cuts or rephasing of one-time spending.

Next steps: administration will prepare a prioritized list of potential reductions and additional options for the board to consider before the June tax vote and final budget adoption.