Kennett Consolidated School District faces 4 percent tax cap under new Act 1 index

During the Kennett Consolidated School District's Policy and Finance Committee meeting on October 7, 2024, significant discussions centered around the implications of the recently announced Act 1 index, which is crucial for determining the maximum tax increase the district can levy. The Act 1 index for the district was set at 4%, a notable decrease from the previous year's 5.3%. This reduction raises important questions about the district's financial planning and its ability to meet educational needs.

The Act 1 index, established in 2006, limits tax increases for school districts unless exceptions are granted by the Pennsylvania Department of Education (PDE). Currently, only two exceptions are available: one for rising retirement costs and another for special education expenses that exceed the index. The meeting highlighted that the district has never pursued a voter referendum to exceed the index, a route taken by very few districts in Pennsylvania.

The committee discussed the historical context of the Act 1 index, which is calculated based on the state's average weekly wage and the Employment Cost Index. The current index reflects a trend of lower allowable tax increases, which could impact the district's revenue and its ability to fund programs adequately. The meeting underscored that while Kennett's index is 4%, other districts in Chester County may have different adjusted indices based on local economic conditions, which can affect their funding and tax strategies.

Additionally, the committee explored the option of an accelerated budget opt-out resolution, which would allow the district to bypass certain restrictions if it decides not to exceed the 4% limit. This option could provide the district with more flexibility in budget planning and execution.

In conclusion, the discussions during the meeting highlighted the challenges faced by the Kennett Consolidated School District in navigating the constraints of the Act 1 index. With the recent decrease in the allowable tax increase, the district must carefully consider its financial strategies to ensure it can continue to provide quality education while adhering to state regulations. The committee's next steps will likely involve further analysis of budget options and potential impacts on educational programs.