On March 13, the Salisbury Township school board held an operations and finance committee meeting to discuss a vehicle and equipment replacement plan, ways to engage the community in the master facilities plan and hear an in-depth report on how the district’s audit netted a $5.3 million surplus.

Bill Brackett, director of facilities and Superintendent Lynn Fuini-Hetten presented the board with a vehicle/equipment replacement plan which was created to assist with proper yearly budgeting in an effort to ensure necessary equipment can be replaced before mechanical failure.

The plan charts each piece of equipment and its expected life cycle.

After careful consideration, two items have been slated for replacement during the 2023-2024 budget year. Brackett requested the purchase of a Kubota tractor for $52,410 and an Exmark mower with a price tag of $12,975.

According to Dawn Nickischer, chief financial officer, there is $168,000 available in capital funds for the purchase of new equipment. The board agreed to move ahead with the purchase.

At the urging of directors Thomas Spinner and Ian Riccaboni, administrators Fuini-Hetten and Assistant Superintendent Kelly Pauling sought ways to inform and engage the community in the district’s master facilities plan.

In addition to publicizing meetings where the plan is discussed and publishing an article about the plan posted in the community update section on the district website, several avenues for community involvement were presented.

The first option would include informal half-hour sessions for community members to attend during the May 8 K-12 art show held 5-8 p.m. at the high school.

The second attempt at community outreach would entail a live ZOOM webinar for stakeholders to attend which would be recorded and posted online.

Riccaboni acknowledged the tough decisions that lie ahead and expressed the need for people in the community to be informed about the “nuts and bolts” decisions that need to be made.

Director Laura McKelvey praised the ideas presented but wondered if there were ways to further reach the community at large by sending a mailer to each household with information on the meetings.

A lengthy discussion ensued among board members concerning ways to reach taxpayers who may not currently have children in the district’s schools. In addition to mailings with targeted information about upcoming meetings, the master facilities plan and budgets, the idea of bringing back the community breakfast and providing information during homecoming community events was also proffered.

During the finance committee portion of the meeting, Nickischer reported the remaining $188,452 from the 2019 bond must be spent by the end of the current school year and the proceeds must be allocated to grounds or building projects.

Nickischer presented an outline of where funds could be used noting the last remaining invoice from the GESA project has been made using these funds. Monies could be spent on projects such as replacing steps at the high school baseball field in the amount of $4,900 and replacing bleachers and a curtain/wall at the middle school for a total of $105,995. The bleachers are particularly concerning as they are original to the building and do not have railings or other safety features nor are parts available to repair them when the need arises. Completing these projects would still leave a balance of $58,207.

Using the master facilities plan as a guide, the board discussed some of the other high priority items listed and weighed the many possible options to make the best use of the monies available. Administration will continue to apply for grants to cover some items and feedback from faculty and staff about their needs will be part of the process.

In her year-to-date two year comparison, Nickischer reported revenues are up $1.5 million over this time last year. Expenditures are $2.5 million over last year which she attributes to the timing of bills and whether there are three pay periods in a month. She expects this will level out next month.

Cash and investments are looking healthy with $7 million more than at this time last year. Funds have been redirected into higher yield accounts and 3-, 6-, 9- and 12-month CDs in an effort to earn more revenue from interest.

Nickischer went on to provide a breakdown of the fund balance generated from the final audit in the amount of $17,684,587. Riccaboni pointed out it may appear the district is flush with cash but much of that money is reserved for bills to be paid, retirement and some cash reserves.

In her monthly finance workshop designed to broaden each board member’s understanding of the Pennsylvania Department of Education’s chart of accounts she focused on personnel services including salaries, benefits and professional and technical services.

As reported at the last finance committee meeting, a $5.3 million increase in the fund balance for the 2022-2023 school year raised some questions from board members. Nickischer, took a deep dive into the specific reasons for the unexpected increase and presented an in-depth look at the trends over the last three years to explain how such a large surplus occurred.

Her findings cited three main areas: increased revenue, expenditures that came in under budget and an increase in state subsidies.

Lower expenditures were realized when positions within the district were budgeted for and left unfilled and as employees retire and are replaced with employees earning a lower salary.

Significant increases in revenue occurred due to a higher rate of collections from real estate taxes, delinquent accounts and business privilege taxes. Earned income from investments played a role in the surplus as interest rates soared to 5% resulting in a large windfall in earned interest.

The lower expenditures and increases in local revenue accounted for $4.3 million over budgeted amounts.

State subsidies in the areas of basic and special education, Pennsylvania Public School Employees’ Retirement System and transportation also came in over budget in the amount of $957,344.

In an effort to provide the board with a year end fund balance projection, Nickischer analyzed current revenues and the budgeted amounts. She also studied prior year bills in order to forecast expenditures for the 2023-2024 year.

Nickischer reminded the board these are projections and assumptions but they should help to make future budgeting decisions.

A timeline for a proposed budget adoption falls on May 15. The proposed budget will be available for public purview May 19 and the final adoption is slated for June 20.

Budget discussions continued with a chart detailing the Act 1 index rates generated by the Pennsylvania Independent Fiscal Office. The current rate the district could raise taxes for 2024-2025 is 5.3%. The rate trends downward each year and bottoms out at 3.1% by 2028-2029.

Nickischer then presented a chart depicting several Act I tax rate increases for 2024-2025 ranging from 5.3%-3.0% and the amount of lost revenue in one year and the subsequent compounding effects.

Director Bill Gaither took issue with her wording of lost revenue and remarked that “you need to understand what your budget needs are and how much you want and increase taxes accordingly.”

Director Thomas Spinner agreed, adding he would not feel comfortable voting for a tax increase unless it can be justified why it is needed. He went on to stress the importance of knowing what expenditures will be in the next five years in order to make a decision on possible tax rate increases.

Nickischer reiterated her goal in presenting the material is to provide the big picture so informed decisions can be made with an eye to the future.

The next meeting of the operations and finance committee will be held 7 p.m. April 10. All meetings are held in the administration building, 1140 Salisbury Road, Allentown.