During the Feb. 1 finance committee meeting Dawn Nickischer, chief financial officer, began the meeting with a year-to-date analysis of the district’s financial health. The report compares revenue, expenditures, cash and investments month to month with the preceding year.

Currently, December 2022 revenues are leveling off but about the same as December 2021. Expenditures were slightly lower which led cash and investments to be 24% higher.

In response to last month’s finance committee meeting, Nickischer ran the numbers to gauge how much revenue would be lost if taxes were raised by 3% or 3.5% as opposed to 4.1% which is the highest allowable yearly increase.

Yearly losses with a 3% tax increase amounted to $318,000 and a $173,000 loss with a 3.5% tax rate hike. Over a three-year period the losses are significantly higher.

In her three year outlook, losses compound each year so the total loss of revenue with a tax rate of 3.5% as opposed to a 4.1% increase would be $645,959 and at a 3% rate increase the losses exceed $1.5 million.

Director Thomas Spinner remarked how clear it is to see the impact of not raising taxes when you look at the yearly losses while Director Joseph Gnall wondered what the increase would be for the average median household to pay a 3% tax increase instead of 4.1%. Nickischer roughly estimated it to be about $25.

Joseph Kuzo brought up the point that raising taxes to support spending is not necessarily appropriate but raising taxes to have a fiscally responsible long-term plan is different. He said the budget really needs to be looked at closely.

Nickischer cautioned there are natural increases in expenses like salaries and benefits; those expenses must be supported with the tax increase.

Segueing into the preliminary budget, Nickischer presented a timeline for the board to follow from the preliminary stages of the budget to final adoption slated for June 14.

Nickischer reviewed the impact charter and cyber schools have on the budget. Tuition to these schools is not free and the district currently has 138 students attending these schools.

Educating one of the current 105 non-special education students costs the district $15,363 per student not including transportation costs. A total of four median residential property taxes support just one charter school non-special education student while eight median household property taxes educate one special education student with a price tag of $30,838 per student. There are currently 33 special education students enrolled in charter schools.

The preliminary budget currently has a deficit of $2.8 million even with the 4.1% tax increase and the average household will see an increase of approximately $167.30.

There are many issues needing to be resolved having an effect on the preliminary budget deficit, namely tax assessment adjustments, fluctuating charter school enrollments, employee retirements, cuts to budgets and current negotiations for professional staff.

The state budget has not yet been passed so it is possible to see an increase or decrease in funding.

Some areas that drove up costs in the budget were anticipated increases in teacher salaries due to negotiations, a 12% increase in health care cost, new debt services, increases in special education costs and an increase in costs for intermediate unit services.

Board President Christopher Freas expressed his concern starting the preliminary budget process with a deficit greater by $1 million than last year and we cut positions last year.

Director Sarah Nemitz reminded the board to not only focus on cutting the budget but think about how the district can raise money. An open dialogue with legislators about the mandates they no longer fund as well as charter school reforms is also critical. She said school boards need to let legislators know these issues are important to the district.

Kuzo said it is unlikely things will change at the state level and charter school reform may not happen but the district is hitting a critical point because the buildings are failing, driving up debt service, expenditures are exceeding revenues and “we are not able to generate revenue because of the way the district is structured. With little room for growth or business we can’t afford our facilities.”

The next meeting of the finance committee will be held following the operation committee meeting March 1 at the administration building, 1140 Salisbury Road.