The Northampton Area School District long-range fiscal plan anticipates $5.1 million in capital improvements are needed in 2023-24 and in the next two to five years in the district.

The long-range plan was presented by NASD Superintendent of Schools Joseph S. Kovalchik and NASD Business Administrator Craig Neiman at the June 12 board of education meeting, held in the Northampton Area High School auditorium.

“It’s a moderately conservative approach,” Neiman said of the plan.

Anticipated capital improvements are contained in the fifth part of the plan. The sixth part, pertaining to the 2023-24 NASD budget, was reviewed before the budget’s approval at the June 12 meeting.

Anticipated capital improvements for 2023-24 include the following.

• AED (automated external defibrillator) replacements: $40,000

• Laubach Avenue fence: $20,000

• Al Erdosy Memorial Stadium public address system: $50,000

• NAHS gymnasium audio system: $50,000

• NAHS generator area guardrail: $30,000

• Tennis court resurfacing: $25,000

• Districtwide heating, ventilation and air-conditioning upgrades: $350,000

Anticipated capital improvements for the next two to five years include the list below.

• NAHS brickwork: $125,000

• NAHS chillers in the gymnasium and auditorium: $1,500,000

• Siegfried Elementary School windows: $300,000

• George Wolf Elementary School elevator: $50,000

• NAHS boilers: $160,000

• NAHS auditorium: $600,000

• Al Erdosy Stadium turf: $900,000

• Maintenance building parking lot: $700,000

• Fleet replacement: $250,000

“The purpose of this long-range fiscal and capital plan is to provide a framework to make long-range budgetary and capital expenditure plans and to understand the long-term impact of financial actions taken in the current fiscal period,” Neiman said.

The first part of the long-range plan addresses revenue.

The market value is depicted in a chart as having increased approximately 80% from 2002 to 2021. The chart depicts assessment value increases driven by new housing and warehouse development.

Another chart notes assessment value increased from $900,000,000 in 2002 to $1,400,000,000 as forecast for 2027. Assessment value and real estate millage drives real estate tax collections.

A chart depicts the average tax increase in NASD, which averaged 0.38% in the last four years and 1.66% in the last 13 years. Another chart forecasts tax increases in the range of 0-3%.

“These last four years have been the lowest tax increase over the last 30 years,” Neiman said. “We anticipate millage increases at or below the Act 1 index.”

The Act 1 index, set by the state, varies year to year.

A revenue forecast chart compares the 2023-24 NASD budget revenue to budget revenue forecasts for the next four school years, with the compound annual growth rate projected to be 3.2%.

The budget revenue for 2023-24 is $126,303,118. The 2024-25 budget revenue forecast is $128,063,459. The 2025-26 budget revenue forecast is $133,054,041. The 2026-27 budget revenue forecast is $137,612,654. The 2027-28 budget revenue forecast is $143,453,128.

Neiman draws several revenue highlights and assumptions in the long-range plan, such as local assessment values continuing recent growth trends, anticipating millage increases at or below the Act 1 index, assuming gradual federal funds rate reduction, impacting district investment revenue, Act 511 (EIT, RE transfer, per capita) continuing to perform at recent trends, state continued investment in basic and special education funding, state continued funding of other subsidies (transportation, Social Security, pension), state gambling funding remaining flat, federal pandemic funds ending and flat federal funding for Title programs.

The second part of the long-range plan addresses expenditures.

An expenditure forecast chart compares the 2023-24 NASD budget expenditure to budget expenditure forecasts for the next four school years, with the compound annual growth rate projected to be 2.8%.

The budget expenditure for 2023-24 is $128,428,529. The 2024-25 budget expenditure forecast is $129,814,465. The 2025-26 budget expenditure forecast is $134,944,384. The 2026-27 budget expenditure forecast is $139,280,543. The 2027-28 budget expenditure forecast is $143,538,010.

Neiman draws several expenditure highlights and assumptions in the long-range plan, such as salary costs reflecting recently settled contracts, medical plan cost increasing an estimated 5% each year, pension cost based on latest Public School Employees Retirement System board forecast, assuming approval of Route 329 project and associated debt service, assuming approval of Bethlehem Area Vocational Technical School expansion and associated debt service, charter school cost growth remaining on trend, including the phaseout of all Elementary and Secondary School Emergency Relief (ESSER) Fund costs, contracted transportation agreement ending June 30, 2024, and utility consortium contracts ending, subject to market conditions.

“That is a pretty big wild card,” Neiman said, of the transportation agreement.

Neiman’s expenditure highlights include “all other” categories forecast to increase at a rate of 2.1% annually (excluding ESSER costs), such as technology equipment and software; curriculum materials, software and instructional supplies; utilities (electricity, natural gas, fuel oil, bottled gas, telephone, water and sewer); gasoline and diesel fuel; maintenance, custodial and vehicle supplies; charter school tuition; BAVTS and Northampton Community College tuition; insurance, legal, audit and tax collection; debt service payments (includes Route 329 and BAVTS); contracted transportation; and repair and maintenance costs.

“Forecast revenue and expenditures growth is essentially equal,” Neiman said. “The good story here is our revenue and expenditures are lining up.”

The third part of the fiscal plan addresses the fund balance. A long-range forecast chart compares the 2023-24 NASD budget fund balance and budget fund balance forecasts for the next four school years.

The budget fund balance for 2023-24 is $16,266,090. The 2024-25 budget fund balance forecast is $14,515,084. The 2025-26 budget fund balance forecast is $12,624,741. The 2026-27 budget fund balance forecast is $10,956,852. The 2027-28 budget fund balance forecast is $10,871,970.

According to the Government Finance Officers Association, general purpose governments, including school districts, should maintain a fund balance of no less than two months of general fund operating expenditures, Neiman noted.

This would be the equivalent of $21,404,755 in the 2023-24 budget; the forecast of $21,635,744 in the 2024-25 budget; the forecast of $22,490,731 in the 2025-26 budget; the forecast of $22,213,424 in the 2026-27 budget; and the forecast of $22,923,002 in the 2027-28 budget.

Neiman said a fund balance assists in facilitating cash flow needs and unanticipated emergency expenditures and has a favorable credit rating impact.

“The more that we can show in that fund balance helps when we borrow money,” Neiman said.

The criteria guide for the preparation of the long-range fiscal plan was to maintain and improve the quality of educational programs; expand the educational opportunities for all students when possible; maintain and improve the physical plant to avoid unnecessary and unplanned repairs and maintenance; and propose real estate tax increases that, when possible, are at or below the state mandated Act 1 index.

See the long-range fiscal plan on the NASD website, nasdschools.org.

The school board next meets 6:30 p.m. July 17 in the NAHS auditorium, 1619 Laubach Ave.