InFocus
Navigating Fiscal Challenges: 2025-2026 Budget Development Update
What is the status of the 2025-2026 school district budget ahead of the preliminary budget vote scheduled for April 22, 2025?
The 2025-2026 school budget reflects many of the same financial pressures our families face—rising costs for fuel, supplies, insurance, utilities, and contracted services. Uncontrollable expenses, such as special education, cyber charter school tuition, and employee healthcare, have also strained the District’s finances. Additionally, unexpected maintenance needs at our aging secondary school complex are expected to add fiscal pressure on the district. Compounding these challenges, the District has one of the highest percentages of tax-exempt properties in Lancaster County, which limits our local revenue potential, further restricting available funding for school operations. Finally, the Commonwealth of Pennsylvania does not pass its budget until after we are required to pass ours. As a result, we are forced to project state revenue based on estimates, creating uncertainty in our financial planning.
The 2025-2026 budget development process began with aligning school and department-level budgets with payroll projections, contractual obligations, debt service schedules, and operational needs to establish a preliminary financial plan. Since the teachers’ contract expires at the end of the 2024-2025 school year and no new agreement has been reached yet, the exact payroll expenditure amount is uncertain. As a result, while it is anticipated that payroll expenses will increase, early budget projections for the 2025-2026 school year have kept payroll flat. And, although the District continues to invest less per student than the Lancaster County average, the early analysis of these variables revealed a deficit. As a reminder, the District is legally required to adopt a balanced budget, which means we must find ways to close the deficit through a combination of expenditure reductions, revenue increases, or the use of fund balance.
Given the initial deficit, as part of the normal annual budget refinement process, the District Administration reviewed the draft budget multiple times and identified opportunities to reduce expenditures. Additionally, the Board directed the Administration to identify further reductions to help minimize any potential tax increase. Therefore, the Administration worked with school leadership to implement a minimum 20% reduction in initial budgets for all departments and buildings, and it flat-funded the budgets for several operational departments. A sampling of budget reductions included, but is not limited to:
- Cut proposed two new maintenance vehicles.
- Reduced District contributions to Priority 2 Field Trips.
- Cut funds for new purchases of library books at the secondary level.
- Reduced K-12 Classroom, English Language Development and Counseling Supplies.
- Postpone the purchase of replacement AEDs.
- Reduced non-mandated Safety/Security Coordinator Training.
The administration’s initial reduction efforts totaled over $2.6 million, however, a budget gap between revenues and expenditures remained.
At the April 8, 2025, regularly-scheduled workshop session, the Board reviewed multiple tax increase scenarios as a potential solution to address the ongoing budget gap. Under the Board's preferred tax increase scenario, a 2% increase for the general operating budget, coupled with an additional 0.5% or roughly $228,000 earmarked for future building projects, will help to mitigate the shortfall. However, at this tax increase level, the District will face an approximate $933,506 budget deficit (as illustrated on slide 11 of the April 8, 2025, Workshop Budget Presentation).
To reduce this deficit, the Board instructed the District Administration to focus on staffing reductions through attritional savings, specifically by not replacing the combined nine employees who have resigned or retired since January 2025, as a way to close the gap between revenue and expenditures. This is projected to reduce expenditures in salary and benefits by $939,261. However, in addition to the reduction in expenditures, the workshop discussion also addressed the potential ramifications of these cuts, including larger class sizes at the elementary level, fewer elective options at the secondary level, program reductions, delays in curriculum review and revisions, and impacts on academic interventions and achievement.
Positions not to be filled for the 2025-2026 school year are as follows:
- 4 elementary teachers.
- 2 high school social studies teachers.
- 1 elementary reading specialist.
- 1 administrative assistant.
- 1 administrator (Curriculum and Federal Programs Coordinator).
Given the uncertain outcome of the ongoing collective bargaining negotiations, a gap between revenues and expenditures will persist in the draft preliminary budget, despite these attritional savings, since the exact payroll increase for the majority of employees in the district is unknown to date. Therefore, at upcoming meetings, the board will need to consider whether to use reserve funds, make additional reductions to expenditures, or engage in some combination of both options to balance the budget. While reserve funds provide temporary relief, relying too heavily on reserves is not sustainable long term due to its impact on financial flexibility, the district’s credit rating, and the district’s borrowing capacity for future needs.
Therefore, in addition to identifying the positions listed above as attritional savings, the Board also engaged in a broader discussion to explore other potential areas for expenditure reduction. As part of this process, the Board directed the administration to research and assess the potential cost savings associated with the following items:
- Scaling back the 1:1 Personalized Learning Initiative by eliminating the program at the elementary level (Chromebooks).
- Eliminating low-enrollment elective courses and exploring schedule options at the secondary level.
- Reducing extracurricular activities.
- Eliminating the Instructional Media Center (IMC) at the secondary level.
- Identifying alternative uses for the state’s Ready to Learn grant currently designated in part to fund the hybrid full-day kindergarten program.
The next steps of the budget process involve finalizing the tax rate, incorporating the Board-directed staffing reductions, and identifying any additional expenditure cuts or use of fund balance to ensure a balanced budget is approved by the mandated June 30, 2025, deadline. A preliminary budget will be presented for approval at the April 22, 2025, action meeting, and it will be available for public display for 30 days. The final budget is set for adoption at the May 27, 2025, action meeting. For more information, including a full list of presentations and additional budget details, please visit the following webpage on the District website: