Lehighton Area School District is staring at a projected $3.4 million budget deficit for the 2026-27 school year, driven by soaring special education costs and the expiration of federal pandemic relief funds that had cushioned the district’s finances for years.

Budget documents presented at a school board workshop Monday show projected expenditures of $54 million against projected revenues of $50.6 million, leaving a gap of $3,448,204. That compares to a deficit of roughly $982,000 in the current school year.

Business Manager Matt Lentz called it one of the tougher budget years the district has faced.

“This is a budget that’s coming completely off of ESSER funds,” Lentz said. “We’re kind of rebalancing, as a lot of districts are.”

The Elementary and Secondary School Emergency Relief program, which directed federal pandemic aid to school districts, had contributed roughly $2 million annually to the district’s budget in recent years. Those funds are gone, officials said, and the costs they helped cover are not.

Special education

The sharpest pressure is in special education. Contracted costs for special education services have more than doubled since 2020-21, climbing from $2.83 million to a projected $5.81 million this school year, a 105% increase over five years. The growth has accelerated: costs jumped 32.2% in 2023-24 alone, and with four months remaining in the current school year, Lentz added, the district’s learning support contracted costs have already matched the entire 12-month spend from 2024-25.

“These contracted services costs outpace any actual index, any cost of living with their increases,” Lentz said.

Superintendent Jason Moser said the ESSER money had obscured just how fast those costs were rising.

“The amount that it increased basically kept pace with the amount that we were getting ESSERs on the books,” he said. “Without that ESSER funding, those would have been real deficits. But because we had extra funding on the books for those years, it probably didn’t alarm people that those costs were exponentially rising. And then you find yourself in a frame where the costs are there, and even if you say status quo, they’re going to continue to go up.”

The district paid outside provider BHA $159,000 so far this year for career and workforce development programs alone. Officials said bringing such services in-house could significantly reduce contracted costs and is under active consideration.

“Do you think we can actually get our programs up to the point where we’re only spending $2 million instead of $5.8 million? Director Jeremy Glaush said.

“I think we have to,” Moser responded. “For the long-term financial health of the district, we have no choice.”

Health care costs

On the expenditure side, total salary and benefit costs are projected to rise from $32.45 million this year to $34.23 million in 2026-27. Health care costs, which have not yet been finalized, are budgeted at a 10% increase, bringing that line from an estimated $7.96 million to $8.75 million. Non-salary expenditures are projected to climb from $18.29 million to $19.8 million.

The revenue picture offers modest relief. Total projected revenue rises 1.66%, from $49.76 million to $50.58 million. State revenue is up 6.56%, to $25.31 million, partly because transportation reimbursements are projected to jump 41.48% to $773,912, which Lentz said reflects delayed reimbursement calculations and rising fuel costs. Local revenue, however, is projected to fall 2.59% to $24.51 million as interest earnings decline. Federal revenue drops 9.73%, to $760,935.

Department budget requests, taken together, total $4.41 million, which is up $175,493 from this year’s $4.24 million. The largest single increase is in building and grounds, which rises $204,897 to $1.61 million. The curriculum budget jumps $130,608 to $392,375, driven largely by a $143,000 renewal of the district’s i-Ready literacy and math platform and planned purchases of new English and math materials for grades 9 through 12 that have gone without updates for years. Technology is the only department showing a decrease, falling $79,141 to $878,250 after the district recycled Chromebooks from last year’s graduating class rather than purchasing new ones.

The middle school budget rises $30,761 to $100,697, reflecting plans to restart an industrial technology program, budgeted at $15,000 for startup materials, along with a $4,459 increase for student awards and a positive behavior initiative, and replacement of orchestra chimes dating to approximately 1950 that a vendor deemed too costly to repair.

The board is scheduled to receive further budget updates April 13 and May 11. Lentz said the district is planning for adoption of a proposed final budget May 26 and a final budget June 22.

“These numbers will continue to be refined,” he said, “as final salary negotiations, health care premiums and state funding figures come into focus.”