Palmerton Area School District faces a $3.4 million deficit two weeks before its board of directors is scheduled to vote on a proposed final 2022-23 budget.

Dr. Al Lonoconus, the district’s interim business manager, attributed the gap to a variety of factors, namely charter school tuition costs that remain high, increased retirement contributions, anticipated rises in medical and dental insurance payments, and escalating everyday costs such as fuel and utilities.

“The slice of the pie you can actually control as a district is pretty small,” Lonoconus told directors during a board workshop Tuesday. “Palmerton is in better shape than many districts in that you have a fund balance there to work with, but it could disappear quite quickly when you look out at the three-to-five year projections if you’re not careful.”

Palmerton’s 2022-23 projection calls for using $2.6 million of those reserves coupled with $826,000 generated from a 4.6% property tax increase to balance the budget.

Should the district raise taxes by 4.6%, a property owner with an average assessment of $44,000 would see their tax bill increase $121. It would also mark the second straight year Palmerton raised taxes to the Act 1 index, or the maximum amount allowed by the state without filing for exceptions.

“Every district is dealing with a lot of the same things right now,” Lonoconus said. “We’re estimating $60,000 to $100,000 more in fuel costs for next year and that is only if fuel stays at the current price it is right now. We got the notice today about the PPL increase. It’s the same thing happening in your homes, we just have a bigger home as a school district.”

Palmerton’s projected expenditures for 2022-23 stand at $37.59 million.

Increases over last year, according to Lonoconus, include an additional $215,000 for salaries and $100,000 for contributions to the public school employees retirement system.

“We’re projecting around $1.76 million for charter costs next year just based on the trends of the last few years,” he added. “We have around 100 students right now in outside charter schools. We pay about $1.5 million right now. Some of those students are graduating and we’re hoping to draw some more back to our school so hopefully those trends start to come back down in the opposite direction.”

The district has two contracts set to expire on June 30, one with its support staff and the other being its transportation pact with George’s Transportation Company.

Both negotiation outcomes, Lonoconus said, will play a role in what 2022-23 expenditures look like.

“On the revenue side, we’re still waiting to hear from the state,” he said. Palmerton’s basic education subsidy would increase 11.62% from $6.82 million to $7.61 million if Gov. Tom Wolf’s budget was passed as proposed.

“We can’t say for sure we’re going to get that so we are holding our expectation low,” Lonoconus said.

Palmerton also has to budget for an additional one-and-a-half special education positions to remain in compliance with the state based on the student-teacher ratio.

“When you hit a certain amount of students in a particular classroom or program, then you have to increase staff,” Lonoconus said.

Palmerton, like all Pennsylvania districts, has until June 30 to adopt its final budget.