Palmerton Area School District’s Board of Directors approved a proposed final budget Wednesday night without raising property taxes, despite facing a projected shortfall of $558,000 between expenditures and revenues.

With expenditures projected at $41.8 million and revenues at $41.3 million, the district is exploring options to close the gap as the June 30 deadline for final budget adoption approaches. However, that shortfall figure could be significantly reduced if the state follows through on proposed additional funding.

“The governor did propose in his budget $496,000 additional dollars for Palmerton,” Assistant Superintendent of Finance and Facilities Ryan Kish said earlier this month. “So if that goes through, we would only have a difference of $61,000.”

Kish called Wednesday’s vote “just a formality in the budget process.”

“The proposed budget will be posted on our website as well as be available for public inspection at the administration office,” he said. “The board will vote on the final budget as well as any tax increase at our June board meeting.”

Board members have expressed reluctance to implement a property tax increase this year, with some members citing recent local tax burdens on residents.

“I’m not in favor of an increase this year,” said director Erin Snyder at a workshop earlier in May. “Palmerton Borough had a big hike this year. I think we need to take things like that into consideration.”

According to the district’s budget presentation, staffing salaries and benefits consume the largest portion of the budget at 64%, representing $26.9 million of total expenditures. Tuition and outplacements, including payments to charter schools, cyber schools and outplaced students, comprise 17% of the budget at $7.3 million. Departmental expenses account for 6%, debt service is 5%, transportation 3%, and infrastructure, including facilities and insurance, is also 3%. The remaining expenses cover miscellaneous costs such as legal fees, security and food service.

The district identified several major cost increases driving budget pressures. Pension contributions through the Pennsylvania School Employees’ Retirement System are projected to increase by $141,000, while medical insurance costs are expected to rise by $640,000 — a 16% increase.

“Medical, again, that’s the big one at 16%,” Kish said regarding insurance increases. “This is all based on our actual usage, and it varies year to year, but the projections are not good for next year.”

Charter school expenses are projected to increase by $346,000, bringing total charter school costs to $2.3 million for the 2025-26 school year.

“That $2.3 million equals about 24 classroom teachers for us,” Kish said.

While no increase in debt service is planned for 2025-26, the district expects to incur new debt in the following year as part of construction projects including new administrative offices and a high school addition aimed at creating a more secure entrance and additional classroom space.

“In 2025-26 we’re going to use our reserves for those project costs,” Kish said at the May workshop. “In 2026-27, we will have a budgetary impact of about $414,000. The tax impact on that would be about 1.29 mills, which for the average taxpayer is a $58.05 increase.”

Adding to budget uncertainties, the district has received warnings about potential federal funding cuts. Kish noted Wednesday that the state had reached out via email stating that “in case federal funds go away, the commonwealth will terminate our federal grants with little to no warning.” These federal grants, he said, represent approximately $500,000 for the district.

On a positive note, Kish said the district’s special education department will receive an additional $150,000 in contingency funds to be used for outplacement expenses.