001Good evening and welcome to the March 9th, 2026 school board budget workshop. This is the first of two workshops. And we'd like to begin this evening, if you would please join me in a salute to the flag. 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. Thank you. As I mentioned, uh this evening is the first of two budget workshops that we will be conducting. Uh the second one will be following along in April. Um tonight we are going to concentrate on the revenue side of our budget. And these are informational meetings uh as we develop our budget for the 26-27 school year. Uh after the presentation this evening, we will first take questions
002from the school board and then uh we'll have an opportunity for public comment as well. And then return back to the school board. Uh I would like to turn the meeting over to Mr. R. McDonald, our business manager, who will make the presentation and uh then we'll follow up with him after that. Thank you. Thank you, President Tydings. I'm going to begin with the budget uh scenario that we look at at our finance committee meetings and in these workshops as well. There's been a little bit of movement in the budget since the last time we met. So, the numbers that you're going to see this evening are a little bit different than what we presented at the last finance committee meeting. And that's due to a couple different things. One of them is the calculation
003for the special education referendum exception that appears on line um three and the column D has increased slightly due to the calculation when we submitted the final worksheet to the state. Uh so, that's represented in column D on line three. Uh the Act 1 index calculation uh has not changed at that 5.2 million. In addition, on the budget development slide that I'm going to show you in a minute, uh we made some reductions to the expense side of the budget. And if you look from left to right, we're still at with no new revenue at about $13.3 million deficit with all in revenue in column D, uh we're just under 6 million at 5. $9 million deficit. The next slide is what we looked at with the preliminary budget. So, it shows you the kind
004of the all in authorized spend that we're up to now uh with the new numbers. So, the budgeted revenue in addition to the Act 1 index, and you can see the breakout there of the special ed exception at 2 million 207 and change. And that brings us to to 195.2 million for revenue. And anticipated spend of 201.1, and that gets us our $5.9 million deficit. Not included in that anticipated spending number is the contingency amount at 4.5 million that you can see detailed at the bottom of the slide. And that brings us to the 205 64544 number uh for the authorized spend. Budget development, continuing to work on we'll continue to work on this obviously to every iteration we bring you of the budget from April, May and June. One of the additions on this
005slide is number seven, department uh departmental reductions district wide, we're at 1.5 million, we'll continue to uh look at that. Our next budget workshop has staffing and enrollment and expenditures, so we'll talk about uh maybe some staffing reductions or some staffing tweaks that are going to reduce the actual expenditure budget. Some things on the horizon that haven't occurred yet, we're going to see the second look from our health care consultant. We're hoping that we're going to see some lower percentages there of increases that'll help us uh reduce that number in the 26-27 budget. We talked about the $20 million bond issue that we're uh pursuing next month. So, if that market looks good uh for the 20 million, we hope to actually reduce the spend in the current year uh for debt service and then
006the 26-27 spend as well. So, that could amount to upwards of uh 5-600,000 dollar reduction uh for debt service and then we'll wait and see what projection uh the second look projection on health care looks like. So, we're continuing to um look hard at that number. We want to get the deficit down to something that's manageable. Uh so, I put this slide in just to give uh the new board members and folks kind of a an idea of what kind of budgeted deficits we've had in the past uh after doing that work. So, we have had some some close to 3 million. We had one in 21-22 that was almost $3.9 million budgeted deficit. But if you look at the average over the last five years, uh it's about 2.5 million. Now, you may recall
007that the capital funds transfer that's in this 26-27 budget, we haven't always done that. So, the fact that we have a $5.9 million deficit is really attributable to the capital funds transfer of 6 million. Cuz if we took that out, we'd have a balanced budget. So, in years where we didn't have that in the budget, uh we still had manageable deficits. So, we also move money at the end of the year. So, the philosophy of the board, and I think rightly so, um to include that capital funds transfer in the budget, so we didn't have to guess about it during the year and we didn't have to then go back and look at a surplus and then uh people really not follow along with our all of our discussions and look at it as something,
008you know, that possibly is a negative. I'm saying that's a positive that we had a surplus and now that we're budgeting for that capital funds transfer, we have a little bit of leeway in what we do with the budget and we, you know, we don't move it till the end of the year. So, you still have the ability to work through the whole fiscal year and then make the decision at the end of the year with whatever uh amount you want to move to the capital fund. So, that's kind of the summary overall of the budget. I'm going to get into the revenue slides now and then we'll um get through a couple of different discussions of what is impacting on the revenue side and then we'll also talk about charter schools, we'll talk about
009the governor's budget. Uh we'll talk about some of the tax impacts for us and what's happening around the county at some other schools and some schools outside the county. Uh so, this slide you've actually seen before. Uh we showed this at a finance committee meeting early on in the year, but uh this is just shows you where we are with our revenue collection. We want that, of course, to be close to 100%. Uh we're averaging about 100 close to 103% if you remove the two years impacted by the pandemic. The detail That was the summary slide. The details on the next slide and that kind of shows you uh local, state and federal. And you can see there's obviously a a federal year that was higher than others. That was the uh reduction, the uh
010relief act and uh money that we got from the feds that year. So, kind of popped up uh as being much larger and then uh some of the federal budgets that we put together, you know, aren't assuming we're going to get grants and, you know, to the good work of the grants department, they're they're writing for those grants and getting them during the year and often times we don't know that till after the budget year is already started. So, sometimes the federal revenue will look a little different. In addition, we have the ability to pull down uh monies at the state level, which impact that federal number as well. So, we manage that number. Total revenue right now untreated is 187.9. Obviously, the majority of that coming from local revenue. We don't rely on the
011state uh for much more than 16% and the largest parts of that are the reimbursement that come from the retirement expense that and the social security. So, they they give us back 50% of that spend. Uh and that's a large part of that state number. Next slide on slide nine, this is um kind of the look that you're going to see for a lot of the slides in the packet and then the same on the expense side. You're going to look at a summary slide and then some detail slides and some historical numbers. In column A, we're looking at current year budget 25 26 where we think we're going to be at the end of the year that projection that ties into the projections that slide that's also in the packet and then the proposed
012column C is the budget that we're discussing this evening 26 27 budget and then the variance in column D as a dollar amount and then the variance in E as a percentage. We talked about in finance the difference in local revenue and the majority that being from property tax. I'll get into that in the upcoming slide. Budget local revenue, you can see the breakdown. Again, no surprise that 92% of it comes from real estate tax revenue and actually the the delinquent tax also is that same tax. It's just a delayed collection of that tax. And the transfer tax can you can say is also related to property. The assumptions that go into building the budget and this is what our revenue assumptions are. These have been in place for several decades long before I got
013here, but we've done some tweaking to it. So in some years and some ways and looking at revenue, it makes sense to look at a shorter run of actual rather than a longer run. You're looking at smooth things that are up and down and obviously when you have years that are descending in collection or increasing, it impacts what that number is. So we try to look at the actual and then temper it based on what we know about what's happening in the current year. One of the big adds in revenue just in the last couple years since interest has returned is what we look at for a rate of return and our projected cash flow. So right now we have 4% built into the budget. And these are all the assessment numbers that we have
014from the county or what we build our anticipated or projected property tax revenue on. So we get those up-to-date. We'll look at those monthly and if that takes in a different direction, we'll bring that number to you and we look at a subsequent budget in our ration. Local revenue and variances, this is just a breakdown of what you saw in summary on the previous page and the current real estate tax revenue right now has a positive variance and you can see which ones have the negative variance. Earnings are down a little bit from what we um Well, excuse me. The earnings are actually up a little bit. So it's a reversal on this slide. It's a negative as a positive in revenue. And so in the black, you're seeing that $200,000. Not as not as
015much as we projected, but that's because we're you're looking at a variance between the projection of the current year, not the budget. So we have a projection that's much lower. We talked about this in finance. The last couple years we've been hit pretty hard with property tax appeals. There's a couple slides in here tonight where we'll look at the detail of that. So the impact of that over a couple years has really hit us hard in the property tax revenue area. Some history on the next slide of local revenue going back to 2022. And you can see the variations there. Next slide is what we looked at in finance when we looked at the variances in the fall. And 24 25 was the last year that we reviewed, the last audit year. And you can
016see the property tax was under what we budgeted by about 1.6 million. And you can kind of run your finger down and see the other years and what the impact of those particular revenue items were and whether they were over or under. Interest income, we brought in a lot more last year than we thought. So that's actually a positive variance of over a million dollars. We started looking at the economic impact on local revenue when we saw a downturn in the economy. That happened right around the time of the beginning of this slide. I think there's might have been a year that we took off for this just to make it look less busy. It was also impacted by the recession. So you can kind of look at interest earnings and see how they dwindled
017down to very close to almost nothing in 13 14 12 13 and now they're back up actually higher than they were pre-recession in the 23 and 24 and 24 25 years. There's also a transfer tax on here, delinquents and interims. All those tend to be impacted by the economy. Next slide is just a summary of what I showed you on the detail slide preceding. Annual property tax assessment, we talked about how this is impacting our tax revenue. This is a slide that the IU put together. So I'll see a couple of those in here. I borrow them if uh if they're appropriate. So you can kind of notice what's happening in Chester County, which is pretty precedent setting cuz I think Chester County was one of the only county in Pennsylvania that had growth in
018every year since its inception until very recently. So you're seeing quite a big downturn from 2022 on down. And the negative impact of interest rate hikes, declining commercial market and assessment appeals. So we're seeing a reduction county-wide for that and the next slide shows you the growth that's happened since 2007. Really just kind of an act one look cuz it started in 2026 or excuse me, 2006. So unfortunately, we have the lowest percentage of assessment growth of any school district in the county. So that's obviously an impact to the biggest driver of our local revenue, actually the biggest driver of all our revenue. So how much have we lost in property tax assessment appeals? That's what shows on this slide. Shows you residential and commercial. Those are the small blue and purple bars at the
019bottom. The green bar is the amount of um loss cumulatively that happens from those assessment appeals. So when you lose an assessment dollar, you lose that dollar for every year that that assessment dollar would have been taxed. So you're seeing a different millage every year. So each year that that dollar's lost, you're seeing a bigger impact of that loss multiplied by the new millage rate. So this cumulative number in the green shows you what the total loss is from assessment appeals back to the beginning of this particular chart. It's pretty significant number. The flip side of that are assessment appeals that we initiate here at the district through our board policy. Gives us the ability to do that. So you can see smaller numbers, obviously. We're using a formulaic um evaluation of property sales and
020looking at the assessed value and then if we see a bump up to a certain amount, we file an assessment appeal. So up in cumulative gain, same kind of logic here in this particular slide. What's lost in one year becomes or gained in one year becomes a cumulative gain. And you can see what that looks like in 26 25 26 at the bottom there, little about 1.1 million. So clearly has an impact on our revenue numbers. So that completes local revenue. Certainly feel free to stop me if you want to ask questions and if not, I will keep going. Okay. So state revenue budgeted at close to 30 million. You can see the breakdown there. The biggest is the retirement. So that's the 50% that we get back from the state. And that's the 50%
021of our expense. And you can see social security is about 2.9 million, same kind of formulaic reimbursement to us at 50%. Basic head funding is at 5.8 million and you see special ed at 2.6. Transportation is pretty flat. We'll get into this when we talk about the governor's budget. And then the state property tax reduction, although it comes in as revenue, it's revenue neutral to us. When we recognize that, we have to reduce our property tax by that amount. Local property tax. So we're reducing the impact of the local taxpayer cuz the state is giving us gaming money to the amount of that 3.7 million. The assumptions that go into building the state revenue budget are on this slide. Basically, they're current year actuals. And if we have a bond schedule, we we use that
022debt service payment schedule. Same with the revenue and variances, same kind of orientation here as it was in local. And you can see the variances there. They're not not real significant except in transportation. Historically on slide 24, going back to 22 23 to the proposed budget in the far right. Because we don't get a lot of federal dollars that everything is on one slide here. So, this the top part of this is the summary and you can see the variances in column D and then the bottom is the historical piece of that. The access medical assistance is the amount of money that I gets pulled at the state. That's the amount of money that comes from MA and we are we draw that money down at the state level. So, we have the ability kind
023of impact that amount. And uh we tend to try to draw it down close to you know, a small amount at the end of the year. State revenue basic ed subsidy. So, this is what typically appears in uh first in the governor's education budget what's gets a lot of press when it's discussed and you can kind of see uh it was virtually flat for a long period of time. When they change Oh, sorry. There we go. When when they change the um calculation of the formula for basic ed and actually had it based more on students and the weight of those students, we got a little more money. So, it just happened in the last couple years. You can kind of see those last couple bars there bump up uh higher than they have been
024in the past. So, I think of course the allotments and what the governor's proposing, the new the the um Governor Shapiro uh he's proposed bigger increases in basic ed subsidy. So, we've benefited from that. Same with special ed. I think for a lot of years it was kind of flat. Uh it's now based on a formula driven by the number of kids and what we spend with those kids. So, we're seeing a little bit of an increase there. And same as in the governor's side of it seeing a little bit bigger adds to those subsidies. This slide is really just showing you uh a little bit of the impact of special ed expenses and it looks at a 10-year roll. So, it goes back to uh 2015-16 to 24-25 and it shows you what the
025net impact is against the funding. So, expenses went up 17 million, funding went up by 365,000. So, it's really just to demonstrate the disparity that happens uh with special ed and the funding at the state level. I inserted the slide uh for the calculation. We had a question about this. I wanted to at least give you the detail of it without all the numbers there and there show you how the calculation works uh at the state level. And it's a 2-year look and it takes the difference between those two actual years and does that calculation. Like it advances each year. So, on this slide, this is an older slide, but it would be 23 and 24 the two fiscal years that are the latest actual years. And it does that calculation. We pointed this out
026uh that it actually removes uh the Act 1 expenditure and you can see that Act 1 multiplied by year one. So, it takes that calculation with the assumption being that you're using that Act 1 increase to pay for part of that increase in expenses. Transportation revenue's been relatively flat. Again, it's formulaic. So, it's based on buses, age of buses, how many kids you're transporting. There hasn't been any money added to it for years. Uh so, it's been pretty flat. Uh it looks up and down here I think just because of the uh the way this slide is, but it's mostly down. Um but you can see our expenses uh are up. So, we continue to see increases in uh transportation costs, but we don't see increases in the funding piece. PSERS, which is the state
027retirement system. You can kind of look and see what's happening with the percentage that we pay, the employer contribution rate that we pay to the state. So, next year we're at 33.6 approximately and that's going to go up projected to go up to 35.7%. It was supposed to be a plateau uh at some point. Uh I've seen different things. Years ago it was plateauing at 40. It was supposed to plateau a couple years ago. It really hasn't happened, but the increases are so small that we're not it doesn't bubble up to the eligibility to have a referendum exception calculation for us. So, the Act 1 index when it's higher makes you know, the ability to get a referendum exception lower cuz you're taking a big a bigger amount if it's a higher percentage. So, it
028just hasn't been enough of an increase in the PSERS to make it make us eligible for that referendum exception. But still very sizable impact to the budget and the net impact although you'll see 100% on the expense line and you'll see 50% revenue. So, when you look at the expense it's not really the impact of the net impact is half that percentage. Uh I just have the dollar amount here on the right so you can see that as a dollar amount compared to the percentage. All right. So, the governor's budget uh released last month had um some increases to our subsidy amounts. So, at least projected proposed increases of 50 million on basic ed which driven by that student weighted formula comes out to about 156,000 uh increase for us. Unfortunately, smallest proposed increase in
02910 plus years. Uh last year was the smallest in 10 plus years, too. So, this is even smaller than last year. Fairly large though increase in adequacy tax equity and minimum allocation supplement of 565 million of which we are eligible for zero. Uh so, regardless of what happens there, we're not proposed to get any additional money. Special ed again a small uh 50 million dollar proposed increase driven by student weighted formula equates to about 42,000 for us. And then there is a student based allocation proposed of that 514 million of which would be a pretty sizable increase for us. So, we'll have to follow that one pretty carefully see what happens. Transportation driven by the same formula uh not projected to change unless our bussing changes. If we have more kids, if we're bussing more
030kids uh if we're using more buses, we would be eligible for more reimbursement, but no additional money uh is added. Last 2 years ready to learn set a minimum of 50,000 added. So, we're eligible for that 50,000. You can't get less than that uh in the 26-27 uh budget. So, that will increase us from that 249 up to 299. So, last year at this time um I believe it was at this particular workshop that um I asked folks of the board to think about whether you want to put these numbers into the budget cuz right now the proposed uh the governor's proposed budget numbers are not in the budget. In the past uh we haven't put the proposed numbers in except for last year we did. Uh that I think it was the first time
031we've done it. Um but you can see the numbers on this particular slide and we can put some of them in, we can put all of them in. Um I guess if I was asked to which ones to put in, I would put in the 156, the 42 and the 50 and I'd probably hold on the 464 uh cuz that's the one that's probably most unlikely to occur at least in that amount. Um usually the small because they're such small increases to the governor's budget of 50 million uh the thing the thinking in Harrisburg and and with the associations it's going to happen uh cuz it's pretty safe to be able to propose those numbers. So, if you want me to put those in the next iteration of the budget, I can certainly do that.
032So, just to be clear your feeling is that the basic education increase of 156,134 the special ed increase of 41,780 and then the $50,000 from the ready to learn grant are not in the budget right now which my math says it's about $250,000 all together. But we could put it in for next for our next meeting. Right. >> Because it seems as though these are not large increases and are likely to to pass. Yes. Is there anyone that would object to that? And I think then that's your answer. We'd like that to go in. Thank you. All right. We will put that in the next iteration. Thank you. Uh next slide just has some additional items that are in the governor's proposed budget and we may benefit from some of these. These are a little
033more kind of on the fence cuz they're not part of what the the basic package is for education, but uh we could be eligible for possible grants. We were in some other years. They do have some interesting requirements or timelines for these grants. So, sometimes because we are um sometimes ahead of the game with things that we do, we kind of miss the boat sometimes cuz they want to see projects that either aren't ready to go or there's no shovel in the ground or and a lot of times our cycle doesn't really match up with the budget cycle, but we would certainly uh file and try to get these grants if And you can see there's a couple other um numbers on here. The the 84 million for PSERS reimbursement. The reason I put that
034in there is cuz a lot of times the the state will publish things uh in the press that includes the reimbursement that they give us for PSERS and social security and they say we're adding 84 million to to the funding of schools when it's really just driven by the 50%. So, if salaries go up, that means and and the PSERS rate goes up, that means that number goes up so the 50% goes up. So, sometimes it gets mixed in with basic ed subsidy or other numbers. So, I just called it out here in case you see anything in writing. Same with the social security. So, that 84 and the 27 might get combined in some type of press that is increase in basic ed or educational funding from their budget. What's not in the budget?
035No new money for construction projects on Plank Road. So, charter school has been obviously something we've been talking about for a number of years to try to get something in the legislation that is impacting what we pay to charter schools. So, finally this year there was a change in the calculate from calculation for a special education tuition and that was mid-year in 25-26. So, we're going to see an impact of the reduction in the tuition amount for special ed in this current year and then we're going to see reduction in the coming year. So, we're going to look at this in detail for 26-27 and possibly reduce the budget based on these new calculations. This slide just shows you what the breakdown is between brick and mortar and cyber charter and you can see obviously
036the the big part of it is cyber not brick and mortar for us. It's bumping up around close to 1.2. It's was 1.2 during the pandemic in 2021. Tuition rates. So, this is the one that is going to be impacted and you can see in the 25-26 column the calculation for the special education tuition number went down significantly. So, that's going obviously going to impact what we're spending. We think we're we're going to probably going to see uh I would say close to 250 uh $300,000 impact in in this number as a reduction. And that that should happen in the current year. So, we're going to look at next year. Obviously, we're guessing what the enrollment is. Uh the next slide shows you the enrollment figures. So, you can see that they're you know, up
037and down uh for us. So, if we, you know, possibly take an average then look at the cost, uh we can see some reductions in 26-27. Charter school tuition and net pension against basic ed subsidy. Again, is basic ed subsidy to pay for these things? Well, I guess you could say yes and maybe referendum exception for the balance. But, in that 10-year roll the same way we looked at the special ed expansion expenditures against funding, you can see the difference of the net impact in the in the disparity there of that 4.6 million between increases in basic ed and what charter school tuition and net pension has done. Fund balance, put that in for your information. It's something that we approved at the last board meeting and that's the audited number that we end in
03824-25 and the number that we start the 25-26 year with. And you can see the commitment um of subsequent year's budget. That would be the budget year we're in and we committed 6.1 million of fund balance to balance the budget. That is the deficit plus the contingency amount. So, that slide I showed you at the beginning of the presentation with had the difference between anticipated and authorized, you have to close the gap with fund balance. So, in our budget that we're currently in we had a deficit budget of about 3.1 million plus 3 million in contingency. That's where that 6.1 comes from. So, if we were going to approve the budget tonight, we have a $6 million deficit and we have 4.5 million in contingency. So, we'd have a $10.5 million commitment of fund balance
039to balance the budget. In dollars and then in percentage of fund balance, not the direction we want to be going in and we'll keep looking at this. Just had a Moody's rating call the other day and we talked about fund balance on that call. And they did note that our fund balance is going down even in the years we were adding to the general fund fund balance, the percentage overall was going down. They recognized though that it was a function of our budget increasing even though they looked at the fund balance number and they said it's virtually the same number it was 10 years ago. So, they said it's not really going to impact our rating. So, that was a good thing to hear on the call. We have we'll we'll hear from them a
040week from now when they release their preliminary report. They give us 2 hours to comment on the report before it becomes final. So, we will look at that report that morning and give them the feedback that we can if any and then they'll release the report. I'm going to jump ahead just past the slide cuz I want to talk about this change in fund balance slide. We talked about this in finance and this is one of the things that that was the discussion in the Moody's rating call about the reduction. So, we had a late revenue recognition that caused this number to be different after we already made the decision to move money to the capital fund. So, we moved the transfer, we got a revenue recognition change that affected 24-25 which impacted in a
041reduction of the fund balance and that's why you see it go down of 441,000 in 24-25. Obviously, we managed uh not to do that in the other years after 17-18. Um and we'll continue to look at that and I think, you know, the decision to move the money again timely although auditors weren't cooperating with our timeline at the time. Uh so, we didn't have a final audit from them when we made that decision. We need to know the information obviously of the transfer to get it into the audit and get it part of what they're looking at. So, the the timing of that I think we'll just have to be a little more nuanced next year when we look at this. Now, I'll jump back slide to um what our contributions have been to the
042capital fund and you folks know that we've moved, you know, five or a little over 5 million last couple years. But, you can see kind of what we moved in other years and why maybe it would have been possibly bond heavy at some of those times. Again, we didn't have major construction projects going on prior to the addition, the one we're sitting in. But, we did have infrastructure projects that happened in the summer. So, we still had to fund those and then we got into some larger projects. We started moving money across to be able to help us pay for those and we'll continue to do that in this 26-27 budget. Capital project funding, just put this in to give you a little bit of graphic of what you already saw in the capital source
043and use in prior years. It just gives you a look of how we're funding what's happening through transfers from the general fund in orange and then those blue section bars are the bond issues. Then you can see the capital fund balance and then the expenditures. Next slide is the entity wide district look. We now have an entity wide uh section in our financial statements thanks to some changes in GASB years ago. So, this is kind of a way to look at that and compare it to the audit and even though we may end the year in a surplus, district wide we are not having a surplus because we're expending money in the capital fund in column C. So, the impact of what we're spending in that 184 million actually throws us into a negative entity
044wide. So, we're losing money every year entity wide. How can that be? Uh because we're filling that hole with what we're issuing in bond proceeds. So, each time we have a capital expenditure that goes beyond what we can move from the general fund, we fill that gap with bond proceeds and that's kind of the 75% 25% mix of bond proceeds and monies from the general fund that have been paying for our capital fund expenditures for a number of years. Projection model, we put this in to give you an idea of where we're going. Again, it's untreated. Uh it doesn't have any new tax revenue built into it either from the 26-27 year or any out year and those assumptions are on the next page to show you really the only impact there is the rate
045of return and we've lowered it to 3.5 in the out years and kind of kept that number going forward. Next slide is what you've seen before, the Act 1 uh index along with the referendum exception calculation which is slightly higher than what we presented last time we looked at this. Where is Act 1 going in the future? This is the independent fiscal offices projections uh coming out of Harrisburg. This is what they share with the legislators when they're looking at what to set the rate. Uh again, the rate is a calculation. Uh the calculation is pretty understandable and clear, but the legislators still have the ability to make any number they want. Uh so, even though it says when they do the calculation that it's let's pick a number, 4%. They can say the index
046is 3%. It's just supposed to be a guide. So, this is what they the independent fiscal office advises them on what to set the index at through actual calculation. So, back in October of '24 the projections for this year were 3.7. That didn't work out. It was a little lower. And then they had 3.4 for next year. And the most recent projection has that down to 3.2. And the the two following years are also down. So, that tells me that the numbers are trending down. And it's affecting that percentage. And they're projecting it continue to go down at least till 2030-31 at 3.1%. This is just to give you an idea of what you know 10 basis points looks like with a tax increase. And you know, a sliding scale. And you can see the
047what the difference is between the 4. 915 number, which is what was on that previous slide. And each successive reduction of that of those 10 basis points. And then you can see the impact of the T homeowner in that right column. And that's based on an average assessment of 265, 313. That's at the bottom of the slide. And you can see the average tax bill is also represented there. A historic historical look at where the property tax rates have been and what the increases have been both in a percentage and a dollar amount. Again, same type of calculation for an average home in T.E. And that's what that average increase represents. And then the average tax rate increase for the last 5 years has been at 3.9%. This slide we started using a couple years
048ago was actually something that the IU had talked about doing. And they were doing some calculations. And we kind of used the same format and some other schools that were often compared to like Radnor and Lower Merion. So, on this particular slide, the red bars are schools that have an earned income tax. And the blue ones are the ones that don't. And of the ones that don't we're the we're the fourth one there with that green arrow at 7,886. And you can kind of see how that fleshes out there. One can I guess make an assumption that schools have schools that have earned income tax have lower property taxes. But again, it's based on assessed value of the district and some other factors. But I think this is an interesting slide to look at. Also
049interesting is to look at the amount of money that comes into these schools from an earned income tax. And that's on this particular slide. This is also an IU slide, Chester County IU slide. Uh You can see that the increases for a lot of the districts happened just automatic. They don't make any board decisions. Just just the earned income amount going up each year. Equalized mills or tax effort um not to get too much into the weeds, but this is a tool that the Harrisburg uses to set our basic ed funding. They actually look at um something called local effort index. And that local effort index is really a calculation of equalized mills. And in that local effort index, if it's below one then they actually reduce your amount of funding based on that. And
050we've been sitting somewhere between 80 and 90% since they started using this metric. So, we don't get 100% of what the funding number is from the state because of that. The logic being that you could raise your taxes more and get the money from the local residents rather than the state. So, that's the logic behind that local effort index. They want to see that be one or greater. Um we don't we don't have that here cuz we've kept our taxes lower as a function of our assessed value. You can see countywide and a couple others that were the second lowest. Usually that bumps around with Great Valley and West Chester, but usually we're right near the bottom. So, the lower our equalized mill rate I have a little note there at the bottom. The lower
051tax effort of the community based on actual market values of the property. So, if you have larger market values, often times your number is lower than one. They use a 3-year averaging of the local effort index and that basic ed funding. The slide we put in a couple years ago just to show you how much how many how many taxes or dollar amount are paid over a 10-year period. So, you can get a longer look at that. And you can see that again we're near the the lower end of the scale in Chester County. And the two schools that are lower have much larger commercial corridors than we have. Which defrays and brings in some additional money there that we don't we don't have that advantage. 25-26 budget and year-end projection. We did refresh this
052from the last time we looked at it. We're still right around the projected deficit. And we'll continue to look at that that projection each month. If that changes, we'll bring in some updates to that. We put this slide in a couple years ago to encourage folks to that are eligible to please file for this rent rebate program. There's been changes to it in the last couple years actually. They're expanding the dollar amount that's available. And they're expanding the eligibility. So, I'd encourage anyone listening to check this out. And you can see we give you the website there. But if you go out to the the PA revenue website, it'll give you this basically all this information on one on one page. Key dates coming up for us, at least from budget development. April 13th is
053the next workshop. April 27th, proposed final. We can certainly make changes. I'd mentioned at finance tonight you can make changes between April 27th and June 8th. We present the final budget for your adoption. That's where we'll set the tax rate on June 8th. We won't do it prior to that. I will pass the budget for authorized spending. Obviously, the requirement of the state is do it by June 30th. Hopefully, the state will abide by that this year and pass their budget, too. As I said earlier, it's pretty safe one. So, we're hoping that the state comes through and gets it done in a timely way. That completes my formal presentation. Certainly welcome your questions. Thank you, Mr. McDonald. Uh be before I ask uh fellow board members if they have questions, I I just wanted
054to go back to to the fourth slide, which is uh development of the '26-'27 operating budget. Because uh I I think that bullet number two and four are related to each other. And I just wanted you to talk about that a little bit. You said at one point that if we didn't have that capital funds transfer of $6 million we'd have a balanced budget. And that's true. Um and you know, you look at the years when we started to do that. Oh, about '20-'21-'22. It's been we've been able to increase it a little bit every year. And that's helped us. Because of number four on this sheet if we put that money into the capital funds budget, then we it's a one-way street. We can't take it out again. But then we don't have to
055borrow so much in terms of the bond. And you said earlier that if the bond rates are better when we go to get the bonds as we build Bear Hill the debt service might not be $950,000 a year. So, I just wanted to reiterate that and see if you have any other comments about it. But it seems to me those two things are very much related. Right. So, the slide that we looked at in finance the last time the capital kind of a summary of the capital source and use where I showed um those the bond issues. The assumption at that point was we were still going to make contributions to help out up leading up until the '27-'28 year where I zeroed it out because we're the the thought was that we would take
056that capital funds transfer and then use it as an operating budget for the new elementary school. So, that assumption along with the fact that the Bear Hill bids came in $6 million under. That built what we told you in finance about the bond issue. So, they would have been if you remember with the board authorized 106 million. And right now we're projecting to be at 80 million instead of 106. So, we've you know, chipped away at that number. So, that debt service is going to be lower at some point. Just a matter of how much lower it's going to be. So, if we do two tranches of 20 million that's going to help us stay under that number. And we have a little bit of control over it because we we know our infrastructure projects.
057We can decide what we do and when we do it. And that's part of what's also in that sheet. So, we'll work to manage that. Thank you. And I guess the obvious thing is the less we have to borrow the less we pay in debt service for over 20 years into the future. So, it helps future years budgets um every year until those bonds are gone. Yeah, absolutely. Uh uh do we have other comments or questions from board members? Mr. Kantorski. Thank you, President Teti. Uh just one clarification. Can we go back to slide 51 for a second? It's There's something I just want to confirm. I We don't have color on here, so I can't So, you've got Okay, so that's what I thought. So, you've got Downingtown labeled as a school that doesn't
058have an earned income tax. I thought that they did. It's cuz It says on the slide here >> They're always They're always bragging about their EIT. >> They're on the next page as having one. So, that's a That should be red. Yeah, let's not give them any extra credit. They're always bragging about their EIT, so. Um So, okay. So, so that So, yeah, so now we're like, you know, it's >> We're the lowest that doesn't have one, yeah. Well, then you've still got Avon Grove. Avon Grove, right, yes. >> Avon Grove. So, they they They're Well, do they have Different part of Chester County, but yes. So, they Okay. So, okay. Um and then Now, something more substantive. Um back on If I can find it. Yes, slide uh 11. Yeah, back there. Make you
059go Great. Okay. So, this is where we have local revenue assumptions and we talked about the current real estate as latest county assessment values including interims and appeals. Um as we saw from the year-to-date in the finance committee meeting, we're running a little behind on on that. And so, given that it's that this is a calculation that is opposed to some sort of trend you know, it's not It's not the average of the previous 3 years or something like that. So, is it Is it a matter and we talked about how it's that's being affected by the appeals. Is this a matter of timing in the sense of why we're why our our actuals are different than our budgets this year in the sense that you know, we don't know the results of the appeals.
060Is that Is that the issue? Right. We We only We obviously only know what we know, but the appeals that are filed in August uh after we already passed the budget, so we don't know what those are going to be. And we also don't know what we're going to be appealing till then. And then the results of those typically don't happen until April. So, when we build the budget uh we know some of possibly some of them, but most of them get kicked and we don't know until April. They don't They don't get decided a lot of times cuz usually they go right from the assessment board right to right to the common pleas. Right. So, okay. So, So, with knowing that, I guess my question is Is there Does it I mean, to think
061about it going forward, is there any Would there be any benefit to sort of disaggregating the appeals part of this calculation and deal with it more like a trend um from from that perspective. I guess cuz, you know, the And my concern is that local real estate taxes are the are our revenue engine at this point. And if we're missing and we miss that and the the percentage numbers if you look at the month-end year, it's they're not that big if you just like, "Oh, it's 2% versus 3%." But when the you know, the denominator is 140-some million, that's a that's a significant amount if you're missing it by that percentage. And so, for forecasting purposes for budgeting, I'm wondering whether it makes sense going forward to to sort of break out the appeals part
062of it and look at that as a as a trend analysis more like the averages that you've got here as opposed to trying to calculate that understanding that we seem to be having a a negative trend on this and that might give us more accurate budgets going for accurate results going forward as comparison to our budget. Yeah, basically we're doing that. We're just squishing it all into one number. We do a projection to look at. Obviously, we look at the ones that are decided, but then we do a projection very similar to what is on the next line. You notice there's two uh 6111s there cuz I couldn't fit it all on one line, but we're also projecting growth, which um has been a little bit less than what we've been budgeting. So, we had
063a half a percent in there, uh which used to be a higher number, but you can see we don't you know, we're lowest in the county in growth. So, it's There's a couple of different projections happening all on that one number. Uh but we can certainly break it out. It would just It would still appear on 6111. We could just do it as a separate analysis. Right. I Yeah, I'm just I'm trying to I'm trying to get to a point where we're not off in March by, you know, 1 and 1/2% on our anticipated revenue from local income taxes. Right. And sometimes, again, like I said, the the timeline of that we sometimes we don't know even by April. Sometimes they go into the next year. Uh we may have a decision that, you know,
064impacts us negatively um you know, long long after the the budget's being developed. Right. But yeah, we could certainly do that. We do We do present the property assessment appeals separately and we did, I think, in finance a couple months ago uh to show you what was settled and what's coming up, but and we'll do that again uh if there's any additional movement on that. And you know, to to your earlier point, we're going to look at the assessment numbers again uh probably a couple times before we bring you the final budget just to make sure that there isn't you know, any positive or negative impacts that are going to significantly impact that number for 2026-2027. Right. Okay. I mean, yeah, I'm just again, just what we're looking at in March, you know, in currently
065in March, we're about $3.1 million off. Right. >> Last year at this time we're about 1.5 1.6 million dollars off. Trying given that, you know, we're dealing with um some larger gaps than we have been in the past, trying to And we're going to have We may have to make some decisions, right? You know, I'm trying to just make sure that we're dealing with the most accurate numbers when it comes to it cuz we don't want to get to the end of the year and be like, "Oh, okay. Well, we're, you know, actually we're our our three our four million dollar gap is actually come to fruition." So. Right. And that's why on this slide, we talked about this early on, we we took two million dollars out of that number for that reason. So,
066there was a reduction compared to that. And that's really the the multi-year impact of what you're talking about. Okay. Thanks. Do you have any other questions? Dr. Mesaros. Thank you, President Teti. Uh Mr. McDonald, I wonder if we could return to page 18. The prop- property assessment cumulative growth. Which number? I'm sorry. >> 18. Okay. I'd be interested to know kind of at a high level what accounts for this I'll I'm not sure if stagnation is the right um way to way to say it because I don't I don't see the overall We don't It's like a 20-year gap that we're seeing from 20 2007 to now. Just wondering if you could comment on, you know, why it's only been about 7% compared to some others which have increased significantly more. Well, I I guess
067if I was looking at it just purely from the numbers perspective, we don't have a lot of room to grow in this district. Um both commercially or residentially. So, a lot of the growth has come from either new houses being built after old houses are torn down or things like that or apartment buildings and things like that. So, other areas that are in part of the county that are a little more rural have the ability to expand and they've been growing. I think Downingtown is a good example of that. Uh Great Valley seen a lot of commercial things. You could probably see them as you drive up 202. Uh and then the areas that are more rural, they just have more ways more reason to expand. And the enrollment in those uh schools like Avon
068Grove and the like are increasing. And, you know, if you even though we're at steady high, uh if you don't have enrollment growth, then you're probably not, you know, seeing some additional property tax revenue as well. Plus, there's a negative impact of the growth that has paid us harder than Yeah, as evidenced by that other slide, it's it's a net effect. But we've seen the you know, to We've seen increases in assessment every year. It's just like until recently with this latest you know, couple years of reductions, it's it has harder than it has in the past. And to that point, I actually wanted to ask a question about appeals. So, do we tend to see when when property owners are appealing, are they appealing the county assessment or they appealing a school district initiated
069appeal? No, they're they're appealing just on their own. They're initiating their own appeal and then we're also initiating our own appeals. And they're basically two different processes and we have a policy that kind of dictates what we do. And they're just doing it based on common level ratio and market values or comps as people call them. Okay, so it's just their own. They're not It's not in response to something else. They're doing it Right. >> Okay. And a large part of it is commercial. Yeah, the the office building market has kind of fallen out in Trevorton. So, all those folks are rushing to appeal their property based on that. Thank you. Mhm. Anyone else? Dr. Hutinski. Thank you. Um Regarding page 11, the rental income which they have have considered in the previous >> Are
070you talking about the athletic facility? I don't like the board's gotten to the point of developing a policy for that, but we talked about having a policy that governs that. If that's something that happens during the year and we and the board decides to do that, then we can put some revenue in. I don't think we should do it now necessarily cuz we're not there yet. Mhm. Understood. No, I I appreciate that. Sort of additional bump that we'll need and I'm wondering will that be available at the next workshop or what's the status? Yes, and I was going to say at finance, but our finance committee meeting is short, so we'll probably talk about it at the workshop. Cuz the Chester County IU and our finance will be here to present their budget. They usually
071suck up the entire amount of the 30 minutes of meeting. But if we have any time, we can talk about it that too. We're looking at that on an ongoing basis to make a determination about what's going to cost to run that building cuz the number that we gave you was several years old and enrollment projections have shifted. We've also seen some opportunities for some potential cost avoidance at the same time. Things overall have gotten more expensive, so that those things are working against each other. I understand how it'd be good to have that number in mind. Um that number though just I know you know this, but for everyone's interest, we can talk about it if you want at the next meeting, but it's for the 27-28 budget, not for the 26-27 year. But
072certainly I could understand how you'd want to want a look at that as you're planning the budget that leads into that. Thank you. Other comments? Okay, seeing none. Uh I I'd turn now to the public to see uh if there any members of the audience that would like to comment or have questions about the presentation. Uh just a reminder in order to comment, you would need to be a district resident or tax taxpayer. So, if you have any comments for for us now, would you please step to the microphone? Seeing none, I I think uh turn back to the board to make sure everyone is set. I guess so. Uh let me just remind you then of our future meetings. We have a regular school board meeting on March 23rd right here at Conestoga 7:30.
073Then we have our second budget workshop which will focus on expenditures which would be on April 13th at 7:30 here at Conestoga and that will follow the the finance meeting that Mr. McDonald was just mentioning which will also include information from the CCIU on their budget. And then on Monday, April 27th at 7:30, we'll have another regular school board meeting here in the atrium at the high school. I think we're all set and that concludes our meeting.