State budget adds $756K for district
LANSDALE >> A recent budget deal in Harrisburg held good news for the North Penn School District.
District CFO Steve Skrocki gave an update Thursday on the impact the 2021-22 state budget will have on North Penn.
“North Penn is going to be receiving about $756,000 in additional basic education funding. We did budget for a $200,000 increase, but we’re receiving $756,000,” he said.
In June the school board unanimously passed a 2021-22 budget with expenses of $291 million, a 2.85 percent tax increase costing roughly $113 for the average district homeowner, and a starting deficit of $5.8 million, while noting a larger deficit in the 202021 budget had been made up by year end due to budget variances. On July 15, Skrocki gave an update, saying the new state budget finalized in late June will also
bring about $111,000 in additional state funding for special education, above and beyond the increase in the basic education subsidy.
“We budgeted a zero increase, so that’s nice to get that additional money,” he said.
Those two figures combine to add $666,812 in new unbudgeted revenue to the budget, reducing the initial $5.8 million deficit to roughly $5.2 million, and that’s before additional new funding, Skrocki said: roughly $724,000 has also been announced in new federal funding that will be passed through the state.
“Funds are allocated in three areas: learning loss, summer enrichment and after-school programs,” he said, and federal rules will require that be spent before 2024.
“So all in all, while there was no charter school reform as we were advocating for, we certainly are appreciative of the additional state dollars that were included in the budget,” he said.
Board member Christian Fusco asked if the new state revenue was “in any way tied to COVID”, and would be withdrawn or reduced in future years. Skrocki said the basic and special education funding would not, and both were allocated via the state’s newer funding formula, which “definitely benefits North Penn,” instead of older formulas used for much of the basic state funding.
Board member Cathy Wesley asked if any of the new funding could be spent on capital purchases versus educational expenses, and Skrocki said it would be required to be used for educational categories. Board member Tim MacBain, giving the board’s legislative committee update, said the increase in basic ed subsidy represents a 6.8 percent increase over the prior year, and the special ed increase is a roughly 1.7 percent increase.
“In all, this budget signifies one of the largest increases for school funding in decades,” he said.
The state’s Department of Education has also announced that local school districts will be able to offer free meals to all students, meaning a higher federal reimbursement rate for districts, MacBain added, and Skrocki said that means no payments will be required from students for breakfasts or lunches in school in 2021-22, while a la carte items will require payments.
Other topics including charter school reform “fell away in Harrisburg, and we will not see that addressed at least until our representatives reconvene in late September,” MacBain said.
Elsewhere in the budget, Skrocki added, ratings agency Moody’s has reaffirmed North Penn’s Aa1 bond rating with a stable outlook. Staff and the board have discussed borrowings to cover the costs of future projects such as renovations at North Penn High School, and Skrocki said while there are no immediate plans for a new borrowing, “the next time the school district considers a bond issue, we’re putting on a full-court press with Moody’s” to seek an upgrade to AAA.
Board member Jonathan Kassa asked how the district’s roughly $38 million reserve fund balance is considered in that rating, and Skrocki said it’s “probably the number one criteria” the rating agency examines.
“We’re really at the sweet spot of our fund balance: not too high, not too low, right where it should be,” he said.
Applications are now being accepted for the 202122 applications for the district’s real estate tax rebate program, which gives residents who are seniors or meet certain low-income criteria a rebate on their taxes paid to the district. With the budget now passed, residents should also have received their tax bill for the upcoming year, and anyone who has not should contact their elected municipal tax collector.
As of July 1, Skrocki added, total district cash receipts for June were roughly $15.4 million and disbursements were roughly $39.7 million, with a total available fund balance of roughly $69 million, a figure up roughly $4.4 million from the same time last year — and a good sign for the yearend figures for 2020-21.
“Our latest projections are that we actually have a situation where we’re probably going to be adding to the fund balance,” he said.
While the 2020-21 budget did start with a deficit, earned income tax revenues were “very robust,” and real estate transfer taxes have been “just completely off the charts” over the past year, Skrocki told the board.