The 2021-22 fiscal year was friendly to Lehighton Area School District, adding $4.76 million to its fund balance following a generous surplus.

District business officials, however, warn that much of that came courtesy of federal Elementary and Secondary School Emergency Relief Fund dollars that will dry up in 2024.

“While we ended 2021-22 with a projected $8.85 million fund balance, our projections show that with expenses outpacing revenues and the upcoming ESSR funding cliff, that fund balance would be dried up by 2025,” LASD Business Manager Edward Rarick said during a workshop Monday night.

Rarick’s report was part of a five-year fiscal projection presented to the board of directors, who will soon take a deep dive into the district’s 2023-24 budget.

Lehighton is expecting a deficit for 2023 based on expenses currently exceeding revenues by just under $935,000. If current financial conditions continue, Rarick said, the deficit in 2028 could be as high as $12.89 million.

“Based on the assumptions for 2024-28, total revenues are expected to go up 1% each year except for a drop of 5% in 2025 due to the federal funding cliff,” Rarick said. “Over the same period, expenses are expected to increase by 4.5% each year due mostly to jumps in employee benefits, and purchased professional and technical services.”

The district will soon begin looking at its 2023-24 budget and, per state law, could raise property taxes as high as 5.7% should the board make that decision. A maximum tax increase would generate an additional $1.12 million in revenue, Rarick said, which would help dig into a projected $2.21 million fiscal deficit. A 5.7% tax hike would result in a $110 increase to a property owner with an average assessment. In Lehighton, 7,174 property owners fall below the average assessment, while 2,378 are above it.

“Raising taxes is an effective means to offset escalating expenditures,” Rarick said, “but should not be the only method of balancing a budget. A substantive evaluation of every aspect of the district is required on a continual basis to ensure dollars are spent effectively. We need to have self-preparedness for tough decisions in the near future on what is most important to the education of our students as well as our community.”