No property tax hike in early Allentown schools budget
Allentown School District is eyeing the potential for a 2023-24 budget with no property tax increase for the first time in more than five years.
“This budget is a relatively painless budget as you will see,” said Charles Linderman, interim business manager, who warned next year’s budget will present more challenges.
Linderman on Thursday gave an overview of a $452.4 million balanced budget to school directors. The board won’t vote to approve a proposed budget until May, and a final budget in June.
The district is able to consider no new taxes, he said, because of pandemic relief funds, an increase in investment revenue, and last year’s historic state funding boost under former Gov. Tom Wolf, which increased the state money guaranteed to ASD annually.
The millage rate is 22.6432. Last budget season, Allentown School Board raised taxes as high as legally possible, by 5.3%. The last fiscal years when the district did not increase taxes were 2015-16 and 2016-17.
Under the Act 1 Index, the board could legally raise taxes by 6.3% to fund the upcoming budget. But as of now, Linderman presented district figures assuming no tax increase.
However, this could change as the budget develops in coming months, he said. For instance, Linderman said new staffing is not addressed in the draft proposed budget that was shared with the board Thursday.
In his presentation to school directors, Linderman said the largest cost drivers will be salaries, benefits and charter school tuition, which together constitutes 75% of district expenditures.
Newly appointed Superintendent Carol Birks said Thursday she plans to funnel funding directly into classrooms. ASD will also focus on continued investment in social-emotional learning, she said.
“This year we’re focusing on a student-based, equity-based budget where students are the primary driver of the decision making,” Birks said.
Funding will be allocated toward resources to increase student achievement in reading and math; graduation rates; and language acquisition for English language learners. The district will also invest in decreasing chronic absenteeism, she said.
When it comes to revenue to pay for these plans, the largest chunk of district funding comes from the state at $267.5 million, or 59% of total revenue. Locally the district anticipates $122.3 million, which accounts for 27% of the budget. Federal money represents 5% of the budget at $21.4 million.
The draft proposed budget also includes $41.2 million in pandemic relief money, which needs to be used by September 2024. These funds represent 9% of district revenue.
Linderman did not include the state funding increase proposed by Gov. Josh Shapiro on Tuesday in his ASD budget calculations because it is too early in the state budget process to rely heavily on those numbers, he said.
“We’re waiting to get some devil in the detail numbers behind it,” he said.
Shapiro proposed a $567.4 million increase to basic education funding and $103.8 million increase for special education funding throughout the state.
This proposal came after a Commonwealth Court judge ruled Pennsylvania’s funding system is unconstitutional last month; experts testified the state is more than $4 billion short of sufficient funding.
Under Shapiro’s budget in its current form, Allentown School District would see a $14 million increase in basic education funding and a $2.2 million increase in special education funding.
But there are still pain points to consider in the draft budget. For one, Linderman
said the state hasn’t provided for any additional funding for building projects.
“That is a devastating blow to your building program,” he said. “It is millions and millions of dollars that the state has taken off the table.”
ASD is in the early planning stages for a new middle school on the city’s East Side.
Another financial obstacle in the 2023-24 budget is charter school tuition rates, Linderman said.
When ASD students choose to attend charter schools, the district pays tuition per student. About 5,000 ASD students attend charter schools.
In 2021-22, a general education student attending a charter school cost the district $10,986; in 2023-24, a general education student will cost the district $11,418, or more to send to a charter school.
In 2021-22, a special education student cost the district $27,866 to send to a charter school; In 2023-24, a special education student will cost the district $29,980, or more.
If total enrollment in the district declines in a future count, the formula for charter school tuition will dictate larger payments per student. The number of students going to charters may also increase. Both of these considerations could impact whether tax payers see a tax hike or not, Linderman said. Of every tax bill, 68.7% goes to pay for charter school costs.
Moving forward, Linderman also warned the board to keep an eye on its fund balance, which sits at nearly $14.5 million as of June 2021. It’s recommended that districts keep about a month’s worth of expenditures in its reserves. For Allentown, the district should have at least $32 million in reserves under that guidance.
While 2023-24 may offer Allentonians a break from rising property taxes and allow the school board a budget victory, Linderman warned the end of pandemic relief money by next budget season means tough choices in the near future.
The district will have to grapple with less federal funding and may have to contend with cutting staffing positions funded through the federal relief money.
“I don’t envy (Birks) as the new superintendent here because she’s going to have a relatively nice year with the budget this year, but next year it’s going to be nasty,” Linderman said.
Morning Call reporter Jenny Roberts can be reached at 484-903-1732 and jrob erts@mcall.com.