An anticipated $6.5 million deficit in the Northampton Area School District 2025-26 preliminary budget may be reduced by $2 million.

“We looked at different ways to trim the budget,” NASD Superintendent of Schools Joseph S. Kovalchik said at the Feb. 10 board of education meeting. “I would like the board to use $1 million of the fund balance.”

The district’s general fund balance was $23 million as of June 30, 2024, as stated in page 30 of the budget document posted on the NASD website, nasdschools.org.

Kovalchik said he and NASD Business Administrator Craig Neiman looked at the Moore Elementary School renovation project. Moore is to be completed in August 2028 for the school to reopen for the 2028-29 academic year.

“We found we can reduce $1 million in the budget (for Moore). So, there’s (a) $2 million (reduction),” Kovalchik said.

Moore renovations, estimated to take two years and cost $51 million, are to begin in summer 2026, before the fall 2026 opening of East Allen Elementary School. Moore students, with enrollment of 380, would be transferred to East Allen. Moore would reopen in fall 2028.

“What we’re looking at now is personnel. I know it will be shock and awe for people,” Kovalchick said during his budget deficit-reduction overview. “We’re also looking at equipment. We’re going to reexamine that. We’ll continue to work on [reducing the budget deficit].”

In his preliminary budget presentation, Neiman listed potential district expenditures and programs, personnel and capital reductions at $18,825,000. Cuts could include $580,000 from the operating budget, $5,890,000 from the capital plan, $9,860,000 from programs, $2,190,000 from personnel and $305,000 from support organizations. Total savings that could address the budget deficit equal $12,935,000, according to Neiman.

It was reported, when the NASD preliminary 2025-26 budget was unveiled at the Jan. 13 board meeting, that the deficit was $6.2 million based on expenditures of $142.8 million and revenue of $136.6 million.

School directors voted 9-0 at the Jan. 13 meeting to approve a resolution not to raise the tax rate more than the state-mandated 2025-26 Act 1 index of 4.8%. Options to balance the budget include combinations of tax increases and fund balance use.

The proposed final budget vote is set for the May 12 board meeting. The final budget vote is set for the June 16 board meeting.

Kovalchik and Neiman said they are not anticipating any windfalls from the Pennsylvania budget education allocation. In his 2025-26 budget proposal Feb. 4 to the General Assembly, Gov. Josh Shapiro said basic education funding would increase $75 million and special education funding would increase $40 million.

“It’s the lowest increase in basic education funding and special education funding in the last decade,” Neiman said about Shapiro’s education funding proposal before the Feb. 10 meeting.

Robert Travis, managing partner at Gorman and Associates, certified public accountants, said the NASD audit report presented Feb. 10 was a good report. The eight-page audit is for the NASD fiscal year ending June 30, 2024. The report stated the ending fund balance was $22,998,234.

Highlights of the fund balance include Lehigh Elementary School escrow at $688,176, East Allen Elementary School escrow at $6,004,773, Moore Elementary School renovations at $2,000,000, future capital projects at $5,000,000, balancing 2024-25 general fund budget at $1,468,542 and unassigned at $7,359,405.

The food service fund indicates a trend toward normalization at the end of several fiscal years, following the impact of the COVID-19 pandemic. The fund had a $47,165 deficit at the end of fiscal year June 30, 2020, a $307,917 deficit for 2021, a $958,126 surplus in 2022, a $422,195 surplus in 2023 and a $542,095 surplus for 2024.

“For the last two years, you’ve been doing better after the COVID years,” Travis said. “You’re back on track, and food service is doing very well.”

Federal programs tested were the Title I Program and Special Education Cluster (IDEA and IDEA Section 619).

“During the audit, we did not identify any deficiencies in internal control that we consider to be material weaknesses,” the report said. “The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under government auditing standards.

“In our opinion, Northampton Area School District complied, in all material respects, with the types of compliance requirements that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2024,” the report added.

School board members raised questions about the Lehigh Elementary School escrow. The new school, 800 Blue Mountain Drive, opened for the 2021-22 school year. School directors wondered why after four years, there is still $688,176 in an escrow account for Lehigh Elementary.

Neiman reported it is due to activity tied to Pennsylvania Department of Transportation. He noted they are in discussions with the former D’Huy Engineering, now CHA, and Terraform Engineering, the engineering consulting firms that worked on the Lehigh Elementary School project.

“I’m told this is typical of PennDOT,” Neiman said. “We’ve been back and forth with PennDOT many, many times to get those funds released.”

Blue Mountain Drive, which is a PennDOT jurisdiction highway, was modified as part of the Lehigh Elementary School project.

“PennDOT is not waiting for anything from our side of the table,” Christopher W. Haller, CHA project engineer, said. “We are waiting for them.”

The board will meet 6:30 p.m. March 10 in the Northampton Area High School auditorium, 1619 Laubach Ave.