To fill the $1.8 million shortfall in the proposed Northampton Area School District 2023-24 budget, the district administration is recommending the NASD Board of Education consider using money from the district fund balance.

NASD Superintendent of Schools Joseph S. Kovalchik said use of the fund balance is one option the school board could choose to balance the budget.

The NASD 2023-24 preliminary general fund budget expenditure is $127,918,870 and the revenue is $126,077,545 - for a deficit of $1,841,325.

Kovalchik, in his first-look general fund budget presentation to the school board and public Jan. 9, noted the estimated ending unassigned fund balance is $8 million, or 6.3% of budgeted expenditures.

If $1,841,325 would be taken from the unassigned fund balance, there would be $6,158,657 in the unassigned fund balance. That would put the unassigned fund balance under the minimum 5% fund balance of $6.4 million.

It was noted Fund Balance Policy 620, which was adopted Sept. 13, 2010, states NASD will maintain an unassigned general fund balance of no less than 5% and no more than 8% of budgeted expenditures.

For comparison, the presentation included two other examples of the amounts and percentages of the unassigned fund balance: $5.1 million, or 4%, or $3.8 million, or 3%.

The presentation stated the unassigned fund balance was $11.5 million for a total fund balance of $19 million in the 2021-22 NASD budget.

As outlined by Kovalchik in the presentation, the assigned fund balance of $6 million includes the Route 329 project or renovation, $1 million; miscellaneous capital projects, $1 million; Employee Benefits Trust of Eastern Pennsylvania, a health care consortium of educational entities, $1 million; contracts for employee payroll increases, $1 million; balance budget, $2 million, which could close the 2023-24 budget deficit of $1,841,325; and the restricted fund balance for the Lehigh Elementary School project escrow, $1 million.

Kovalchik outlined several tax options based on the 2023-24 general fund budget deficit of $1,841,325:

• 2.75% tax increase, 1.53 millage increase, $0 fund balance use, $96 average annual tax increase

• 2.25% tax increase, 1.25 millage increase, $337,725 fund balance use, $79 average annual tax increase

• 2% tax increase, 1.11 millage increase, $509,325 fund balance use, $70 average annual tax increase

• 1.75% tax increase, 0.97 millage increase, $677,325 fund balance use, $61 average annual tax increase

• 1.5% tax increase, 0.84 millage increase, $833,325 fund balance use, $53 average annual tax increase

Any of the tax options outlined would keep the fund balance in the 5-8% range the school board established in 2010.

The annual taxpayer increase is based on the NASD average taxpayer assessment of $63,000, which represents 64% of district taxpayers, according to the presentation.

During the Jan. 9 board meeting, school directors voted 8-0, with one director absent, to approve, at the recommendation of the administration, a resolution to not increase taxes above the Act 1 index, which is 5.1% for the 2023-24 fiscal year. Kovalchik said he did not think the board would raise taxes above the index.

Kovalchik said his administration will provide 2023-24 budget updates at board meetings. The timeline includes approval of the proposed budget at the May 8 meeting or earlier and approval of the final budget at the June 12 meeting or earlier.

“Matt deserves a lot of credit,” Kovalchik said of the district’s total fund balance, referring to NASD Business Administrator Matthew Sawarynski, whose last day was Jan. 11. Sawarynski was lauded at the meeting by school board members and district officials.

“Matt and I spent a lot of time together these past six, seven years,” Kovalchik said.

“I do honestly think the district’s in a better place than when I came here,” Sawarynski said.

Sawarynski is credited with spearheading reverse-assessment appeals for new warehouse construction in the district, which has garnered increased revenue, including $3.1 million in the 2023-24 preliminary budget.

“All in all, I think we’re in a good place and we have a lot of options moving forward,” Kovalchik said.

School Board Appreciation Month was observed at the Jan. 9 meeting with school directors given wooden name plaques made by Northampton Area Middle School room 379 students.

The school board’s next meeting is 6:30 p.m. Feb. 13 in the Northampton Area High School auditorium, 1619 Laubach Ave.