For now, South Middleton School District is projecting a $1.4 million deficit in its 2018-19 general fund budget.
School board members are scheduled to meet at 7 p.m. Thursday to vote on whether to ratify a new teachers’ contract with the South Middleton Education Association.
Approval of the pact would set the salary scale for teachers next year and help to solidify cost estimates for employee benefits.
Right now, district administrators are projecting revenues of about $34 million and expenditures of about $35.4 million, said Matthew Ulmer, business and operations manager.
“This is the proposed preliminary budget so we are extremely early in the process,” he said Monday. “There’s a lot of work we will be doing over the next [few] months. There’s a lot of information we will learn that will impact the budget as a whole.”
The union contract and salary scale is only part of the equation. In February, Gov. Tom Wolf is scheduled to unveil his proposed state budget that includes basic education and special education subsidies for next year.
For now, South Middleton is carrying over its subsidy levels from the current school year to next school year, Ulmer said. “We have not given increases to revenue because we don’t know what they are yet.”
For the second year in a row, the South Middleton School Board may seek exceptions under Act 1 that would allow the district to increase the property tax beyond its base index.
The Act 1 index for budget year 2018-19 is projected at 2.4 percent for South Middleton. If approved as the maximum tax increase, the 2.4 percent would yield about $463,000 in new revenue.
South Middleton can only apply for exceptions that account for increases in special education costs and in the local contribution the district makes to the Pennsylvania Public School Employee’s Retirement System.
Much of the $1.4 million deficit is due to increased costs in employee salaries and benefits including retirement and health insurance. That’s pretty standard when personnel costs make up 70 percent of the budget, Ulmer said.
He said that for 2018-19, South Middleton has set a cap of 12 percent as the maximum increase the district would allow for health insurance costs. “We will hope it will not be as high,” Ulmer said.
The state procedure for seeking Act 1 exceptions required South Middleton to make available for public inspection a very early version of a proposed preliminary budget. The board may vote to approve that budget on Feb. 12.
“We will be working in February, March and April on data collection, department meetings and finding ways to go about closing the gap,” Ulmer said. “It’s going to be a tough battle. There are going to be tough decisions. We will come to a balanced budget at the end because we have to. We have to find a way.”
A final budget must be advertised in May for final adoption in June.