Palmerton Area School District will look to slice into a $2.1 million deficit following a preliminary 2022-23 budget unveiling Tuesday night.

Interim Business Manager Dr. Alan Lonoconus told Palmerton’s school board that expenditures stand at $37 million and revenues at $34.1 million. A 4.6% property tax increase, the maximum amount Palmerton is allowed to adopt per state law, would generate $826,000, leaving it with its current budget gap.

“It’s a preliminary starting point,” Lonoconus said. “Expenses are outpacing revenues and it’s happening to everyone, not just Palmerton. We’re going to hope for the best as things continue to shake out.”

One of the major cost drivers again in 2022-23 is a projected $1.2 million expense on cybercharter school tuition.

Gov. Tom Wolf’s state budget sets tuition at cybercharter schools at $9,800 per student, which he said would save districts a combined $199 million. Currently each district pays a different tuition amount per student based on a formula using a school’s average daily membership. The state budget, however, has yet to be passed by the Legislature.

When a regular education student attends a cybercharter school, Lonoconus said, Palmerton pays around $14,000 in tuition and that cost jumps to $32,000 if it is a special education student leaving the district.

“We did see some students come back from cybercharter schools following COVID-19 but not enough to take big bite out of that number,” he said. “I talked to some other business officials from around the state. Coatesville, for example, is a much bigger district but they spend $68 million a year on charter and cyber tuition. All of these districts are in the same boat.”

As it is for almost any other industry, Lonoconus said, inflation is hitting the school district.

“Heat, cafeteria costs, electricity,” he said, “if you name it right now it’s going up between 3-10%.”

Rising expenses put board members like Earl Paules in a bind. While Paules said he ran for school board, like many candidates do, with a thought process that he was never going to raise taxes, sitting at the board table has given him a different point of view.

“You don’t really understand until you sit up here,” Paules said. “I was that guy that said I won’t raise taxes and I hate doing it because they are my taxes too, but it has to happen.”

If Palmerton adopts a budget with a 4.6% tax increase, a property owner with an average assessment would see their tax bill increase $121.

Palmerton’s basic education subsidy would increase 11.62% from $6.82 million to $7.61 million if Wolf’s budget was passed as proposed. Like other school business officials, however, Lonoconus won’t hold his breath.

“It would be nice if we got it all, but the GOP has indicated it isn’t happy with those numbers and will likely want to whittle that down,” he said.

Palmerton is estimating to have about $7.8 million in its fund balance at the end of the 2021-22 fiscal year. Pulling $2.1 million to balance the 2022-23 budget would still leave it with $5.7 million.

“That’s still a healthy number in the eyes of the state,” Lonoconus said, “because they want you to have around 8-10% of your budget as a fund balance. So while it wouldn’t be the end of the world, using that much of a fund balance is not a habit you want to get into.”