2020-2021 Budget Information
FINAL BUDGET ADOPTION (JUNE 23, 2020 School Board Meeting)
The Elizabethtown Area School District Board of School Directors approved the 2020-2021 Final Budget in the amount of $66,325,372 at its regularly scheduled June 23, 2020, school board meeting. The approved budget includes an increase of .4699 mills in the real estate millage rate, which increases the rate from 17.0878 to 17.5577.
The 2.75% increase is expected to generate an additional $1,011,672 in revenue. For a homeowner with the median assessed home value of $179,250 (median “homestead” value), the homeowner would realize an $84 increase from the current year. As part of the budget approval process, the board approved the following items:
- Approved a $83.73 Homestead/Farmstead credit per eligible property.
- Extended the 2% discount window through September 30 (was September 15).
- Extended the base amount payment window (no discount or penalty) to December 31 (was November 15).
This year’s budget preparation was far more challenging given the significant uncertainties and financial implications caused by the state-wide shut down due to the COVID-19 pandemic. For the 2019-2020 school year alone, the District is projecting a LOSS of $1,016,009 in local revenue (Earned Income Tax, Real Estate Transfer Tax, and Interim Real Estate Tax Collection) due to the COVID-19 pandemic and state-wide shutdown. Projected savings from the school closing for the 2019-2020 school year total only $725,896 or a net loss of over $290,000.
For the 2020-2021 budget, the District forecasted a $1,558,563 LOSS in local revenue (Earned Income Tax, Real Estate Transfer Tax, and Interim Real Estate Tax Collection revenues) due to the continued ramifications of the COVID-19 pandemic and state-wide shutdown. Coupling the forecasted losses with flat funding from the state and the District had a $1,579,018 million gap between revenue and expenditures.
Using the $1,011,672 in additional local revenue with $751,310 in reductions to personnel (1 administrative position, 4 teaching positions, and 2.5 support staff positions); $502,300 in budget reductions; and the use of over $450,000 in fund balance and CARES Act funding, the District was able to balance the budget despite the significant loss in revenue.
Even with these serious fiscal challenges and the many uncertainties on our immediate and distant horizons, the District remained committed to providing our students with instruction, learning opportunities, and experiences to support their future goals through our Life Ready Model. The goal for the 2020-2021 budget and beyond was to ensure our graduates are best able to cope with the demands of the workforce and/or the postsecondary learning experience while maintaining fiscal solvency for our future students.
For more information on the impact of the global health pandemic, unprecedented shutdown of states and communities, and the corresponding economic implications, see the information contained in the Proposed Final Budget Adoption section below.
BUDGET PRESENTATIONS (May 26, 2020 - June 23, 2020)
- June 23, 2020 - Final Budget Presentation
- June 9, 2020 - Budget and CARES Act Update
- May 26, 2020 - Budget Update
PROPOSED FINAL BUDGET ADOPTION (May 12, 2020 School Board Meeting)
In addition to educating students K-12, developing and adopting a fiscally sound budget for the Elizabethtown Area School District is one of the most significant functions of our administration and elected school directors. A budget has wide-ranging implications on not only on our school system and the quality of our educational programming and offerings but also on our community and taxpayers.
This year’s budget preparation has been far more challenging given the significant uncertainties and financial implications caused by the state-wide shut down due to the COVID-19 pandemic. It is unclear how long it will take for economic recovery however, at the very least, we expect it to be several budget cycles for the school district. The current unknowns directly related to the COVID-19 pandemic and state-ordered shutdown which are impacting our ability to accurately forecast revenue and expenditures are as follows:
- What will the Commonwealth provide school districts in the form of basic education, special education, transportation, and other state subsidies given the enormous deficit Pennsylvania is facing due to the shutdown?
- How will major sources of local revenues like the earned income tax, real estate transfer taxes, and interest earnings be impacted by the shutdown, and for how long?
- What will the impact of small business closures and increased unemployment have on our local economy?
- How will proposed legislation in Harrisburg potentially restrict or limit local communities’ authority to generate revenue to fund schools?
- How will the stock market and interest rate volatility impact our investment earnings?
- What will the long-term impact be on our self-funded health care costs given the pandemic and rising costs to treat individuals affected by the virus?
- How will investment performance affect the District’s mandatory contribution to the state retirement system?
- What will be required of schools to open for business as usual next school year and the associated costs (i.e.potential need for more teachers to lower class sizes, enhanced cleaning and sanitation protocols, changes to transportation services, cafeteria renovations, etc.) with implementing those changes?
- What unfunded mandates by the legislature will be removed in order to better align fiscal and operational resources.
Despite these serious fiscal challenges and the many uncertainties on our immediate and distant horizons, we remain committed to providing our students with instruction, learning opportunities, and experiences to support their future goals through our Life Ready Model. Our goal for the 2020-2021 budget and beyond is to ensure our graduates are best able to cope with the demands of the workforce and/or the postsecondary learning experience while maintaining fiscal solvency for our future students.
Given the unprecedented shutdown and corresponding economic implications, we are anticipating a significant impact on our current budget (2019-2020), our proposed budget for the 2020-2021 school year, and for several years beyond. Those impacts are as follows:
2019-2020 (ESTIMATED differences from Budget)
- $577,297 – Projected LOSS in Earned Income Tax Revenue (estimate from Lancaster County Tax Collection Bureau - LCTCB).
- $296,101 – Projected LOSS in Real Estate Transfer Tax Revenue.
- $142,611 – Projected LOSS in Interim Real Estate Tax Collection.
- $305,046 – Projected SAVINGS in substitute costs with moving learning online.
- $285,850 – Projected SAVINGS in transportation costs.
- $45,000 – Projected SAVINGS in Utility costs with moving learning online.
- $90,000 – Projected SAVINGS in Contractor costs (security & custodial).
OVERALL for 2019-2020 Budget
- $1,016,009 – Projected LOSS in Earned Income Tax, Real Estate Transfer Tax, and Interim Real Estate Tax Collection revenues due to the COVID-19 pandemic and state-wide shutdown.
- $725,896 – Projected SAVINGS in expenditures due to the COVID-19 pandemic and state-wide shutdown.
2020-2021 (ESTIMATED differences from 2019-2020 Budget)
- $863,563 – Projected LOSS in Earned Income Tax Revenue (estimate from LCTCB).
- $195,000 – Projected LOSS in Real Estate Transfer Tax Revenue.
- $300,000 – Projected LOSS in Delinquent Real Estate Tax Collection.
- $200,000 – Projected LOSS in Earnings on Investment (Interest Income).
- Forecasting, at best, flat funding from the state for basic education and special education subsidies, as well as transportation reimbursement.
- Potential drop in Real Estate Tax Collection. The historical average is 97.15%. A 1% drop in collection results in a loss of $382,800 in revenue.
OVERALL for 2020-2021 Budget
- $1,558,563 – Projected LOSS in Earned Income Tax, Real Estate Transfer Tax, and Interim Real Estate Tax Collection revenues due to the COVID-19 pandemic and state-wide shutdown.
2021 and beyond
- How soon will Earned Income Tax Revenue recover?
- How soon will Earnings on Investments (Interest Income) recover?
- What will the impact be on the State Retirement System (PSERS) and potential increases in contributions at the local level?
- If the state uses federal funds (CARES Act) to reduce education funding in 2020-2021, how does the state resolve the budget deficit in future years?
Closer Look at the 2020-2021 Budget
- The Board of School Directors passed a $66,325,372 preliminary budget for the 2020-2021 school year on May 12, 2020 (less than 1% increase over 2019-2020 budgeted expenditures).
- Without a tax increase, the gap between expenditures and revenue in the approved preliminary budget is $1,579,018.
- Factored into the 2020-2021 budget is the Lancaster County Tax Collection Bureau’s estimate for EASD to lose approximately $1,300,000 in Earned Income Tax, Real Estate Transfer Tax, and Interim Real Estate Tax Collection revenues, as well as a projected $200,000 loss in Investment Earnings due to the COVID-19 pandemic and state-wide shutdown.
- The budget includes a staffing plan that implements $751,310 in reductions due to the elimination of an administrative position, four teaching positions, and 2.5 support staff positions.
- An additional $502,300 in budget reductions is projected due to deferred technology; supply and material; and athletic and extracurricular purchases, as well as postponing several program expansions.
- The proposed tax increase in the 2020-2021 preliminary budget is 2.75%. A 2.75% increase is expected to generate an additional $1,011,672 in revenue and would decrease the budget deficit to $567,288 (the state-allowable index for EASD is 3.3%).
- Assuming a millage increase of 2.75%, the new rate would be 17.5577 mills for the 2020-2021. For a homeowner with the median assessed home value of $179,250 (median “homestead” value), the homeowner would realize an $84 increase from the current year.
- The District plans to use at least $564,000 or roughly 13% of its undesignated fund balance to help close the gap. EASD has one of the lowest fund balances in the Lancaster-Lebanon Intermediate Unit.
- Despite these cutbacks, the administration and school board are confident the 2020-2021 Proposed Final Budget will allow EASD to maintain its quality educational program for the upcoming year and keep the District in as solid of a position as possible given the many uncertainties with the economy for future years.
The budget will now be on display for the required thirty days to allow for public review and comment. Over this time, district administration and the board will continue to review the budget and make any necessary refinements. The board of directors will vote on the 2020-2021 Final Budget at its regularly scheduled school board meeting on Tuesday, June 23.
- May 12, 2020, School Board Meeting* – Proposed Final Budget Adoption (budget on display at www.etownschools.org for 30 days).
- May 26, 2020, School Board Meeting* – Budget Update.
- June 9, 2020, School Board Meeting* – Budget Update.
- June 23, 2020, School Board Meeting* – Final Budget Adoption.
*All School Board Meetings are being conducted online using the ZOOM platform. Log in information will be posted to the EASD website at www.etownschools.org prior to the meeting.
BUDGET PRESENTATIONS (January 14, 2020 - May 12, 2020)
- May 12, 2020 - Budget Update
- April 28, 2020 - Budget Update
- April 14, 2020 - Budget Update
- February 11, 2020 - Budget Update
- January 14, 2020 - Five-Year Plan Update
ACT 1 RESOLUTION (December 17, 2019 School Board Meeting)
The Elizabethtown Area School District Board of School Directors approved an Act 1 resolution certifying the District will not raise local taxes at a rate to exceed the school district's Act 1 index of 3.3% for 2020-2021. The purpose of this resolution is to allow the school district to continue through the general fund budget preparation process for 2020-2021. This resolution states the school board is not planning to raise the real estate tax rate for the next fiscal year beyond the approved Act 1 index for the Elizabethtown Area School District. The school board may approve a tax increase up to 3.3% but not exceed this percentage.