The Panther Valley School Board last week shot down a proposed 1.5-mill tax increase to support construction of a new elementary school as it prepared to adopt its preliminary budget for 2025-26.

Outgoing Business Manager Jesse Walck proposed an option that would set aside $241,685 assigned to the fund balance for a new school, which is expected to cost more than $67 million.

“Obviously, $241,000 is not going to support a $75 million construction cost,” he said. “But it’s part of the solution.”

Walck explained that the board may need millage for a couple other years, or maybe the state funds the district at the proper level, and the board can assign existing millage toward a school, he said.

“But you need to start,” he said. “If you don’t start putting money away, you’re going to run into problems.”

Still the board voted 8-1 against a proposal that would have set the overall millage rate — with tax balancing measures and keeping the district’s revenue level — at 68.13 mills for Carbon County and 65.84 mills in Schuylkill County. Each mill generates $160,779.

That would have meant an overall 2.98-mill increase in Carbon, or $66.26 a year for a property with the average assessed value of $22,200, and 3.08 mills in Schuylkill, or $52.42 a year for a property with the average assessed value of $17,020, Walck said.

Director Michael Alabovitz was the only board member who voted in favor of the option to start allocating funds toward construction of a new school.

The board instead voted 5-4 to approve an alternate option, which still increases taxes slightly but keeps district revenues level, to fund a $41 million spending plan for 2025-26.

Voting against the option were directors Renee DeMelfi, Pat Leonzi, Anthony DeMarco and Board President Daniel Matika.

“You still have an increase in millage, but that’s just to keep our revenue level,” Walck said. “Because of the Homestead calculations, we were going to lose revenue.”

Funds needed

The Homestead Exemption gives retirees and seniors a break on their taxes, but the district needs to make up the revenue, he said. The $165,761 increase in the Homestead allotment from the state impacts the district’s millage, Walck said.

This option sets the millage at 66.44 for Carbon, an increase of 1.29 mills or $28.64 a year for a property with the average assessed value, and 64.21 for Schuylkill, an increase of 1.45 mills, or $28.64 a year on a property at the average assessed value.

Matika said that he didn’t want to see an increase, but the majority voted in favor of the option and the district has a balanced budget because of the small increase.

“I think we could have done without (an increase),” Matika said. “But I get why they wanted it.”

Walck presented a balanced preliminary budget with revenues and expenses at $40,970,859.54, and beginning and end fund balance of $8 million.

Numerous factors contribute to this budget, Walck said. One is the continued high Public School Employees’ Retirement System contribution rate, which is 34%, or 34 cents on every dollar, he said.

Special needs

The district has also seen inflation hurting the district’s purchasing power with a 3.1% increase over last year, most spending to keep pace with increased enrollment and an increasing number of special needs students — making up one quarter of overall enrollment.

Many of the special education students coming in also have greater needs, which correlates to socioeconomic factors in one of the poorest school districts in the state, Walck said.

The district also doesn’t know if the state will continue to fund to the level needed through the fair funding lawsuit, as there is no legislation in place to do so, he said.

The state has said that once funds are issued, as they were last year, they become the new baseline, but Walck doesn’t believe the state can or will continue to fund in subsequent years because its own fiscal projections are bleak.

“They’re playing this year by year, and we can’t count on it all the time,” he said.

The district also has large capital needs with projects within all its facilities, and a documented need for a new kindergarten to fifth grade elementary school, Walck said.

Inflation and the dire need for a new elementary school is why Alabovitz said he voted for the budget proposal with the 1.5 mill set aside.

“It’s a shame we need to raise taxes at all, but inflation affects the schools just like it affects all of us personally,” he said.

“Our business manager recommended the tax increases so that we can save our funds to build a new school and do some much needed repairs to our facilities,” Alabovitz said. “I trust his judgment.”

In addition, the district needs to plan for upcoming contract negotiations, Walck said. The district is currently negotiating the paraprofessional contract, which is up in June, and the teachers’ and confidential staff contracts are up next year, and the contract with administrators under Act 93 is up in June 2027, he said.

This budget does on include any additional projected state funding, such as increases in educational funding proposed under Gov. Josh Shapiro’s budget, because it’s unclear what the district will actually receive, Walck said.

Cyber school

On expenses, cyber charter school spending continues to rise, he said. Walck is projecting costs to increase by $1 million to $4.5 million for the current 329 cyber students the district funds.

The district also doesn’t know how many more cyber students it’ll have next year, many of which have never set foot in a Panther Valley school, he said.

The district’s health insurance experienced a large increase in claims that would have cost Panther Valley over $1 million, but the risk management strategy that the board recently put in place stopped the loss.

Special education costs are expected to increase more than $500,000 with Behavioral Health Associates cost at $198,000 and Intermediate Unit costs at $310,000, Walck said. Transportation costs in this area could also increase based on the needs of incoming students.

Maintenance costs are up due to inflation, and the budget also has $150,000 in capital project costs for existing needs, Walck said.

Replacing aging technology also continues to be written into the budget, including new Chromebooks, he said. The district bought a large number during the pandemic and these devices have a five-year life, Walck said.

The district will continue to replace devices this summer, hoping to avoid a burden in any one year, he said.