The State College Area School Board on Monday approved a proposed 2024-25 district budget that includes a 2.65% real estate tax increase.
The increase, which is half of the maximum allowed by Pennsylvania’s Act 1 Index, would bring the district’s millage rate to 50.9228. It is the lowest real estate tax hike in the district since there was none in 2021-22 because of ongoing COVID-19 impacts.
A budget hearing will be held at the May 20 school board meeting, and the final budget will be presented for approval on June 3.
The proposed budget includes $202,570,869 in expenses and $197,934,645 in revenue. The projected final unassigned fund balance is $13,382,428, or about 6.6 percent of the budget.
Debt service fund balance will be used to reduce the $4.6 million budget deficit by about half, while projections for state funding, which won’t be set until at least the end of June, were calculated conservatively and could increase, according to the district.
Randy Brown, district finance and operations officer, said it is not typical for the district to have an unbalanced budget, but it is not prohibited.
“This is not a common thing for us, but it is something we are going to continue to try to correct between now and when we present the final budget at the beginning of June,” Brown told the board. “Although we’re asking you to approve a proposed final budget, there still can be changes to the final budget before when it’s presented and you approve it.”
As usual, salary and benefits, including health care, retirement and other benefits, make up the vast majority of expenses at 73% of the budget, followed by debt service (9%), supplies and equipment (5%), purchased property and other purchased services (5%), charter schools (3%), professional services (2%), transfers and fees (2%) and deferred maintenance (1%).
Health insurance costs are projected to be $20.5 million, an increase of about $3.9 million, Finance and Operations Officer Randy Brown said. Contracted carrier costs for bus drivers not employed by the district will increase by $470,000.
New recurring costs include the re-establishment of a full-time secondary diversity, equity, inclusion and belonging position for secondary schools, which was previously grant-funded until the end of the 2022-23 school year.
Other additions include a part-time high school math position, a grant-funded Multi-Tiered Support System teacher, AP exam expenses at a cost of $45,000, a new safety and security budget at an overall increase of $64,000 and higher substitute teacher employee rates with $249,000 in related costs.
Three teacher positions that previously were funded by grants also now will be covered by $262,866 local revenues.
On the revenue side, the vast majority — about 80% — will come from local sources, as is typical. Real estate taxes totaling $118.5 million constitute 75% of local revenue and 61% of overall revenue.
Earned income tax revenue is “trending slightly above” the 2023-24 budget at $22.66 million, Brown said, while realty transfer taxes are projected at $2.5 million. Interest on investments is also expected to increase significantly because of higher interest rates, with $3 million projected for 2024-25, up from $1 million in 2023-24.
Projected state revenue of $38.6 million represents 20% of the budget and federal funding of $1.475 million is 1%.
