Hard decisions lie ahead for Lehighton Area School District’s board of directors as it looks to tackle a preliminary budget calling for a $3.49 million deficit, its business administrator said Monday night.

Patricia Denicola dove deeper into the district’s 2020-21 budget during a finance committee meeting and addressed how she thinks it landed in its current financial position.

“The goal throughout this entire process is to move forward with a plan to never be in this position again,” Denicola said. “Yes, we fall back on real estate taxes because that is how the state funds education. It’s unfortunate that the state relies on the local taxpayer to fund education.”

Denicola also reviewed historical revenue and expenditure data for the district. Expenditures rose from $41.47 million in 2016-17 to a projected $44.41 million in 2020-21, while revenues only rose from $40.57 million to $40.92 million over that same period.

“This district is in the position it’s in because it spent more than the revenues it took in,” Denicola said. “Since 2016-17 through the 2020-21 preliminary budget, expenditures have increased, on average, 7%, while revenue rose less than 1 percent.”

State and local funding has remained relatively flat, Denicola said, with the exception of PlanCon reimbursements in 2018-19, which came later than expected.

“That was about $700,000 and portions of it should have been coming in 2016-17 and 2017-18. For one reason or another it did not and I was able to get them shortly after I started (last March) for 2018-19.”

The largest cost driver in Lehighton, or any district’s budget for that matter, is salaries. Lehighton’s current teachers contract began in 2016-17 and runs through June 30 of this year. Denicola pointed to a statement in the minutes of a November 2015 workshop, when former business administrator Brian Feick said the contract represented a 9.8% increase over four years including $200,000 for the first two years and $120,000 for the next two years.

“The actual numbers don’t align with that statement,” Denicola said Monday. “Lehighton had 327 employees in 2015-16 and currently has 289. There was a drop in the final two years of the contract, but not the drop I would have expected to see with that much of a decrease in the number of employees. I don’t know where those numbers came from, but the total salaries did not trend in that fashion.”

Denicola began Monday by outlining what the 2020-21 proposed state budget means for Lehighton.

If adopted by the state as proposed, Lehighton would receive a basic education subsidy of $9,470,583, a special education subsidy of $1,631,497 and Ready To Learn funding of $374,159. It represents a $225,075 increase over 2019-20.

In his budget address, Gov. Tom Wolf proposed to establish a flat tuition rate for all cyber charter schools and apply the same formula used to distribute special education dollars to local districts to the state’s charter schools.

“If the reform went through, our potential budget relief is $140,914,” Denicola. “It does, however, seem like this is a long shot to pass.”

Final budget adoption must happen by June 30. Lehighton has a board meeting scheduled for June 22.

According to Denicola, key budget numbers are still being determined including state funding, salaries, benefits, charter school and special education costs.

“Collective bargaining negotiations with teachers is ongoing so that will be a big factor going forward and the potential for cyber charter reform is also out there,” she said.

Budget updates will be provided at Lehighton’s monthly finance meeting, which are held on the second Monday of the month.

“We’ll continue to discuss program and personnel alignments,” she said, “as well as examine options for supplies, software, textbook and other expenditures.”