001[music] >> We are called to order. >> Do roll call. Miss Krats Miss Krats Miss Nyman Mr. Radcliff DeGroat >> Here. >> Mr. Radcliff DeGroat >> Here. >> Dr. Weir >> Here. >> Dr. Wiley >> Here. >> Mr. Brophy Miss Connor Mr. Panarella Four present. >> I would like to rise and pledge allegiance to the flag. And then a minute of silence. >> I pledge allegiance to the flag of the United States of America and to the republic for which it stands, one nation under God, indivisible with liberty and justice for all. >> Nobody signed up for public comment number one. >> All right, that takes us down to our discussion and information section for this evening's finance committee and Mr. Lentz I would like to share with you some projections and forecasting on future
002future possibilities of budgets. So Mr. Lentz I'm going to turn it over to you. >> Thank you Dr. David Houser. So I wanted to first provide an update on the Act 1 index. >> Did you turn it on? On the side. >> It is now. Thank you. So, we've talked about the Act 1 index. And it is projected out. And to refresh, Act 1 index is a composite of data that's collected on the Pennsylvania statewide average weekly wage, as well as an employment cost index. That cost index is based upon the costs that are collected for elementary and secondary school employees. So, it's both reflective of the cost of the salaries for education institutions, as well as the salaries throughout the state of Pennsylvania. So, if you recall, we've our um sitting with a proposed
003final budget that's at a 1.9%, which is below the base index of 3 and 1/2%. The Independent Fiscal Office forecasts out the index that will then be finalized in September for the 2027 to 2028 budget year. So, as the data available at this point, the index appears to be hovering at a 3% um forecast. So, in particular, as of this point for 2027 to 2028, it's a 3.2% base index. Um we're coming off of, you can see on the history, actual index that has been as high as 5.3%, 4%. Um that's coming out of the fact that this is a a a lagging indicator based upon increases that took place to wages during um the pandemic um coming out of the pandemic, um as well as um other cost data that's a part of these
004numbers. So, what I'm going to do is present um some updated financials that represent where our budget is for this year as far as a percentage increase. So, looking at if we had a 2% tax increase in future years and then at the end show you So, if we were looking at the index right now, you know, what does the budget look like at a very early first look? And we know we have contractual pieces that have to come together, benefits that have to come together, and those are kind of the major driving components to our budget in addition to some of the local decisions that we've made with moving forward on full-day kindergarten and other curriculum initiatives in particular. >> Mr. Lantz, do you Just so there's no confusion, you just want to remind
005the board and and our community about where we are right now with our current um uh proposed final budget. Just so we're not confusing over forecasted things that would go beyond. >> So, correct. So, the the proposed final budget is at 1.9% for tax increase. >> For 42627. >> And so, what I'm presenting now will be looking at some actual data on the next slides of our budgets, then looking at this year's budget being approved later this month at the legislative meeting at 1.9% for a tax increase and then forecasting out at a 2% and then the 3.2%. So, when we look historically, our revenues over the past four previous years of actuals that have been audited, we've had revenues that have exceeded our budgetary expenditures. That's been a combination that we've discussed with regards
006to the process we went through this year to align revenues to where they actually were hitting as targets. Also looking at aligning expenditures to um, more reasonable targets of what we actually spend during a year, in particular with, um, positions turning over, position vacancies, um, changes to benefit elections during that year. Um, but, you know, we have a very solid financial history, um, that, um, we've been able to on that yellow line, um, really, you know, maintain, um, a viable fund balance for the district, as well as to provide transfers to the capital projects fund, the technology fund, and our debt service fund. On the next slide, um, we look at the, um, current budget that we're in, which is 25-26. Um, that budget, if you recall, was approved with a deficit, um, little over
007a million dollars of a deficit of expenditures exceeding revenues. We've talked throughout the budget process about the alignment that took place, looking at the fact that while the budget was approved with a deficit, the actual expenditures and revenues when they trend together are going to show that the budget's balanced and allow us to continue to make transfers to, um, our capital projects, technology reserve fund, debt service fund there. When we then look at the currently balanced, so revenues equal expenditures for 2026 to 2027 budget, um, that, including the 1.9% um, tax increase is a balanced budget. And then we look out. And so at a very high level, when we look out this far, it's very normal for the expenditure trends to outpace revenues because, you know, we're looking at, um, benefit costs, um, increases
008to our staffing, um, as to a number standpoint, and that outpaces the 1.9% increase we have this year, as well as the 3.2 Act 1 index because you have changes that are going to take place. You're going to have, for example, individuals that are going to retire from positions when those positions turn over. Um individuals start at a different salary and benefit basis. Um with the budget, also, you know, we're really using information on trends for costs of goods, right? We're in a very um escalated environment for the cost of supplies, utilities, um those expenses that um you know, really have to shake out over these years. So, the projection is really, you know, a best look from an um a standpoint of the trends, but knowing that, you know, these trends will become more
009clear as we go into the um development of the 27-28 budget. I think the one stand-away is what we were able to do this year with bringing the budget for 26-27 at a 1.9% is probably not where the budget can be every year going out based upon um the costs that we're um adding to the budget, um but also can be some considerations that we'll look at at the end of the forecast with regards to some of these driving trends, in particular on the benefit piece um with regards to costs of claims um that um everybody's experiencing in the marketplace for benefits. So, when we look at a budget forecast, we make the assumption that we're going to uh have in these next slides about the budget forecast and having a 2% tax increase um
010in place in 27-28 and then in each future year um of the budget forecast. We also know that our assessment, our tax base um that generates um our um revenue is projected to grow. We don't know all the details of how that's going to come online or not, but we can build in assumption that that base grows by but 1% um every year. The other anomaly is where state funding goes. So, right now, um it's unknown that um there'd be any significant increases in state funding. Um we have, over the past 2 years, been um beneficiaries of the state's adequacy funding, which is driving dollars to districts such as Boyertown that has um been identified as underfunded by the state. Um but, that comes into these forecasts as we get more details to kind of
011flesh out this gap between revenues and expenditures. From a healthcare standpoint, um we've estimated 10% um our actual healthcare this year um was a little under 6% for a trend, um but we have to consider both what might happen in the marketplace. Um we'll talk about some of those drivers later on, as well as the fact that as we add positions, we're essentially adding individuals who will be on our healthcare that bring what's called experience to that pool um and can can change um trends there. We've incorporated our staffing costs uh for the full-day kindergarten plan, um as well as the curriculum purchases that are expected to take place. In particular, those will um hit at the next level in the 2027 to 2028 budget. So, from a revenue perspective, when we look at the
012forecast, we forecast the um 27-28 um budget and subsequent budget years, um what we see happens is that um we generate a 2% increase in our um property tax uh revenues. Um there's some um other growth assumptions with regards to local revenues uh for real estate transfer tax, earned income tax at um a 1% um but, that really drives, at this point, um about 2 million of an increase to our budget a year for revenues off of those increases. And so, before adding any other revenues to the budget, that's really the driver that lands at the revenue budget each year. So, when we then look at salaries and benefits, those are the drivers on the expenditure piece. So, if we highlight those from an initial standpoint, those are projected to increase all in. So, that's
013including new positions that are being added to the budget, current contractual requirements, the market adjustment for support staff in place to go for next year as well. We really see that on the salary piece, that's about a 4.2% hit to the budget. That also is relatively just shy of a $2 million increase. So, right there, your salary costs have pretty much, you know, at a projection standpoint, offset the increased revenues that you're expected to receive in that year for the budget. When you then look at benefits, the payment to the state's pension system, as well as for social security, those increase as our salaries increase. So, those are 4% increases. >> [snorts] >> And then, again, the health insurance increases in out years by 10%. So, when you look at the benefits coming together with
014salaries as a whole, you're looking at anywhere from a $4 million to $5 million increase at this standpoint with these projected trends. And again, you know, identifying this is a tool to look at how we can hone in on costs and get a better picture as we will start to look at the 27-28 budget in [snorts] the fall. To give a little better perspective, I did a visual up. So when we look at benefits, and in particular this this greenish aqua color, the health care costs are significant driver for schools and employers because of the costs in the marketplace for high cost claimants as well as prescription drugs. The retirement piece has relatively become stabilized. There's been significant increases to that rate over previous years, and so that does stabilize out that one of the
015largest drivers to really hone in on is the benefit costs. To give a perspective of that, so when we look at our data as of now for benefits, essentially our costs for health care are being driven by 67 high cost claimants, right? And [snorts] within that, they're generating $3 million of our spending on benefits. And as a percentage, it's 21% of what we spend on health care costs. And that's driven by market costs, in particular prescription drug costs. And in the next slide, we'll talk about the increase in particular that we've seen within our group on spending for prescription drugs and in particular GLP-1s. So if we backtrack and look historically, 2023-24 we had 37 individuals who were receiving GLP-1s through our plan. So that was $218,000 of spending. When we look at our projection
016for 2026 to 2027, um that's at 123, um total members. So, almost five times the number of members um receiving GLP-1s, and as a cost goes to just shy of uh 1 and 1/2 million dollars of our plan costs. And so, um you know, this is one of the largest drivers that any employer is dealing with with regards to um spending increases on healthcare. Um if there aren't any um adjustments made to the plan design to um account for these GLP-1s, um and in fact, many of the healthcare plans that um would be fully insured um have had exclusions or limitations on GLP-1s added to them. Um we're a part of a healthcare consortium. Also, our benefits tied to what has been negotiated. So, any change is really have to be part of that process.
017Um but this is something that I don't think, you know, 4 years ago um was on the radar as a growing expense. And if you've been under an existing benefit structure, um you can't change it until, you know, you're at at the table for contract negotiations, um you know, with these costs. Um but this is a significant trend that um across the healthcare arena is projected to continue to grow um and and increase in cost um to healthcare plans. And these costs are outside of the high-cost claimants that I had up before here. Um these are purely individuals that are receiving GLP-1s um as prescribed by by their medical professionals. So, when we pull together salaries and benefits into our expenditure forecast, and we look at drivers that um are really coming predominantly from salaries
018and benefits, we see that the projected increases are between 4 and 3% every year on the expenditure side. So, one way to um address the shortfall from, you know, the restrictions of the Act 1 index to the expenditures, um you know, is to, you know, adapt the, you know, our health care plans, um also to get um better refinement with regards to um staffing costs as we, you know, have staff, you know, um vacate positions and turnover positions as a whole. And that's This is a normal process, you know, every school district goes through um because of the the nature of um wanting to forecast out to have the basis and an understanding of the road map ahead, um but not being able to hone in on what the actual details are going to be.
019So, on the next slide, if we look at if we were at this point for '27 to '28 to have a forecast that we would be looking at increasing to the projected Act 1 index as a whole, um even with that as a a dollar amount, um we stand with a a deficit at this point in time based upon the trends that that we have. Um and so, it's a really important consideration as we look at um costs um to be mindful of and to look at um various options to um adjust these these costs for the district. >> And to further compound the data that we have, want to talk about the different fiscal years. So, if we start at the bottom of this chart, you know, we're closing out the 25-26 fiscal year.
020That's going to be audited. So, we'll have a basis of what our actual spending was for 25 and to 26. We're going to start July 1st with the 26-27 year, which will be based upon the 1.9% tax increase and the staffing that we've incorporated into the budget. And then as we get to the late fall at the top, we can being able to get better estimates for where staffing has landed um with um you know, our composite to start the year. Also, additional information on benefits because um benefit data is also lagged. If you see a doctor or you receive a script today, those [snorts] claims um take time to process through the system. So, that gives us, you know, a better picture of what our actual trend is um based upon um usage of
021of the health care program. >> Any questions from the board? Any things you want to discuss? So, we would really I you know, Mr. Lance has really provided you. We try to be as conservative as possible. Um you know, some of the expenditures at 10% health care. We were you know, um less than we were five on under 6% 6% Um so, we estimated at at 10. We flat funded all state and federal funding um as it is um and really wanted to just see where those things and it's good for us to as we you know, budgeting continues 365 days a year. And as we end one budget cycle, we're right into the next. So, it's it's it's optimal for us to understand some of the limitations that we have, some of the opportunities
022that we have, where contracts currently are, where they aren't, where state funding is, what is the projected Act 1. We don't even know for 27-28. That doesn't come out in finality until September. Um right now, it's being projected at 3.2, which is a drop from 3.5, which we once had. Um so, there's a lot of discussion topics that we need to have as we begin our meetings as uh as cabinet and directors with some of the high-level conversations about starting the 27-28 budgeting. And what does that mean from a what are our cost drivers, where um can we look um at at things from from different angles to be able to bring bring back to you throughout this coming next fiscal year, all the things that you're going to want to know. Um and um
023and it starts it starts now. And uh you know, not a lot of positivity that's coming out of this type of presentation with where the Act 1 is dropping, expenditures are are you know, supplies and utilities and everything else is on the rise. Um and as health care seems to be on on a significant rise, um it helps us to set up a barometer for where we want to go with some of the goals that we've established in a strategic plan for the next 5 years. Some of the things that and opportunities with all-day kindergarten, some of the things we were doing with our curriculum cycle. So, where those important things are that we know are going to be some expenditures throughout the year are important to um to draw out and to see where
024we can have some savings um along the way as well. And where we can cut some costs that we currently um, do have so that we can come in and back to you with some reasonableness for what we would recommend um, you know, as as any possible tax increases in 27-28. >> Brother >> Mr. Lentz, I have a question. Is there Is there any way that you can like uh, put something together about, you know, as far as our revenue coming in, um, what that is in uh, residential and commercial? Is there any way you can break that down? >> Certainly. So, so again to your point, um, once we approve the final budget, we'll perform our actual tax billings. So, I can get a breakdown of that um, as well as look at some
025historical data um, as far as changes that we're seeing uh, within that breakdown. So, absolutely. >> All right. Thank you. Thank you for your report. >> No, I mean I think it it is it is a process. Um, it's you know, managing these multiple years. Um, and again, you know, other variables that come into play include what um, we have with regards to payments to charter schools. So, that's a calculation process that um, you know, will take place and and be reconciled both for this year as well as for next year. Um, that can impact that um, as well as where a final state budget lands for uh, 26-27 um, and what indicators there are for for future years. >> There is no public comment for period number two. Um, we have our upcoming meeting
026dates next. >> We do and our next finance committee date as we are closing out the fiscal year here. We will begin in September with a finance committee meeting here on September 8th at 6:00 p.m. >> Okay, any public any board members comment? No, seeing none. Motion to adjourn the meeting. >> We are motions. >> Meeting adjourned. >> [music]