“I was trying to think of a phrase for tonight,” Northampton Area School District Superintendent of Schools Joseph S. Kovalchik said before the board of education’s first look at the 2020-21 preliminary general budget. “And it’s ‘the best is yet to come.’”

Kovalchik and NASD Business Administrator Matthew Sawarynski presented the district’s 2020-21 preliminary general fund budget at the Dec. 16 school board meeting.

“We’ve been working on this budget since August,” Kovalchik said, noting it was his 10th NASD budget presentation and Sawarynski’s first.

“This is the first one in my tenure where there are so many unknowns,” Kovalchik said.

Foremost among the unknowns is the impact of anticipated real estate revenue from new warehouses and residential developments.

Tax revenue from the new warehouses and housing depends on when the projects are completed and go on the tax rolls. The potential revenue is an estimated $1 million to $4 million.

A vote on the 2020-21 preliminary budget is expected to be on the agenda of the next NASD school board meeting, 6:30 p.m. Jan. 13, 2020, in the administration building, 2014 Laubach Ave., Northampton.

The NASD 2020-21 preliminary general fund budget has expenditures of $114,717,284 and revenue of $112,299,469 - including $3,200,000 from the fund balance - for a deficit of $2,417,815. NASD’s estimated ending unassigned fund balance is $5.7 million.

The tax impact requires 56.99 mills, an increase of 2.1 mills, or 3.8 percent, from 2019-20 millage of 54.8 mills.

The average annual increase per household is $115, based on the district average residential assessment of $54,600, which is 50 percent of NASD taxpayers.

The expenditures of $114,717,284 include nondiscretionary expenditures of $108,436,289, including:

• Salaries and benefits, $76,808,383

• Debt service, $10,135,589

• Transportation, $6,415,738

• Intermediate Unit 20 and other services, $5,685,771

• Cyber and charter schools, $4,400,000

• Bethlehem Area Vocational-Technical School tuition, $2,503,180

• Utilities, $1,645,500

• Northampton Community College tuition, $842,128

Salaries and benefits are 67 percent of 2020-21 budget expenditures.

The 2020-21 budget cost drivers, according to the presentation, are:

• Special education, $1.4 million increase

• Cyber and charter schools, $800,000 increase

• Public School Employees’ Retirement System and Social Security, $800,000 increase

Possible additional 2020-21 budget increases include:

• Cyber and charter schools enrollment increase

• Special education cost increases

• Unfunded mandates

• Insurance costs

Possible 2020-21 budget decreases include:

• Bond refinancing, $350,000

• Retirements

• Taxes

The NASD 2020-21 preliminary general fund budget revenue of $112,299,469 is an increase of $1,767,254 or 1.6 percent, from the 2019-20 general fund budget revenue of $110,532,215.

The summary of the 2020-21 revenue of $112,299,469 includes:

• Local, $74,083,569

• State, $33,191,596

• Federal, $1,176,000

• Other, $3,215,000

The 2020-21 revenue includes:

• Fund balance, $3.2 million

• Warehouses and new housing, $1 million

• State basic education funding and special education funding, $175,000

• Earned income tax revenue, $125,000

• Transfer tax, $100,000

• Title funds, same as 2019-20

• Access, same as 2019-20

The 2020-21 revenue does not include:

• Possible warehouses and new housing, $3.9 million

• Assessment appeals, $1 million to $2.2 million

• Additional basic education funding/special education funding

• Tax increase of 1.8 percent, or 1 mill, equal to $1.1 million

• Maximum Act 1 tax increase of 3.2 percent, or 1.76 mills, equal to $2 million

• Tax increase with estimated exceptions of 4.4 percent or $2.8 million

• Act 44 grant with $45,000 approved by state, expected in spring 2020, and $405,928 requested over two years, with approval or disapproval from state expected in spring 2020

Under personnel, the budget has two new hires: a math teacher at Northampton Area Middle School and a special education one-to-one teacher at Lehigh Elementary School. The special education teacher is state mandated. The math teacher hire reduces the number of students per classroom.

Under facilities, the Siegfried Elementary School heating, ventilation and air conditioning project is scheduled for summer 2020 at a cost of $2.4 million.

According to the presentation, the administration “will continue to work on reducing the budget deficit.”

At the Jan. 13 meeting, the administration is also expected to ask the school board to approve applying to the Pennsylvania Department of Education for exceptions to the Act 1 Index, set at 3.2 percent for NASD for 2020-21.

The exceptions apply to school construction, special education and retirement contributions. NASD routinely applies for the exception but has not used it.

The budget outlines 2020-21 district goals:

• Continue to develop and implement plans that master best practices in digital teaching, learning, citizenship, safety, communication and collaboration for all stakeholders.

• Provide the strategies and resources necessary to enable all students to progress in the general education curriculum.

• Review and plan for findings found in the special education audit, which will include professional development for staff members.

• Enhance academic and safety plans, which will provide students in grades K-12 the opportunity to succeed in all areas of student life.

• Research, develop and implement comprehensive social-emotional and trauma-informed programs to address student needs.

• Coordinate and refine standards-based report cards in K-2 and implement for students in grades 3-5 and explore expanding for students in grades 6-8.

• Complete the new Lehigh Elementary School, scheduled to open for the 2021-22 school year.

• Develop and communicate plans to address future capital projects and student enrollment.