Shippensburg Area SD weighs 4%–5.3% tax scenarios as fund balance and rising costs pressure budget

Shippensburg Area School District finance staff presented three property-tax scenarios — 4%, 4.5% and the Act 1 index of 5.3% — and outlined how each would affect the district’s budget and taxpayers, while noting a final budget decision is scheduled for June 9.

The presentation showed the district’s general fund balance has grown from about $3 million in February 2006 to roughly $17.2 million in 2024. Of that, staff said roughly $2.3 million is unassigned (no current expenditure tied to it), while the remaining balance is largely assigned for future projects and debt. District staff urged the board to weigh using fund balance versus raising taxes to cover an anticipated structural shortfall.

Caleb Barwin, who led the presentation, told the committee the three tax options would generate approximately $1.41 million (4%), $1.59 million (4.5%) and $1.85 million (5.3%) in additional revenue. He also detailed the major out‑of‑the‑ordinary expense drivers for 2025–26: about $910,000 for new personnel items approved in the proposed budget; an 11% medical‑insurance renewal that staff estimated would add about $842,000; and an increase in district expense for cyber‑charter enrollment, which staff projected could cost roughly $665,000 given current enrollment trends.

Barwin said some capital items have been assigned within fund balance, and cited projects such as the James Byrd roof (approximately $1.4 million) and other facility work that the board has previously approved. He also said transportation contract renewals were settled and that higher interest rates have improved the district’s investment income, which staff increased in the revenue assumptions.

Why this matters: Board members framed the decision as a choice between “which pain” to take: raise taxes now to preserve fund balance, or spend down reserves and accept lower interest income in future years. Several board members expressed reluctance to raise taxes if state aid arrives later in the year and residents cannot be refunded. Others said raising to the index would better fund planned needs and preserve fund balance for future years.

Board timing and next steps: Staff asked the board to express a preference at the May 27 follow‑up so staff can prepare the final budget for the June 9 vote. Barwin also reminded the board that PFM — the district’s financial advisors — will present at the May 27 meeting to discuss borrowing options tied to ongoing capital projects.

Quotes and positions: Barwin summarized the scenarios and cost drivers in his presentation, saying, “the 5.3% ... generates about $1,850,000” in additional revenue for the district. Board member Dr. Nathan Goetz said he preferred going to the index, arguing, “nobody wants to pay more in taxes, but there is nothing I would rather pay taxes toward than the education of our children.” Other board members said they were more comfortable at lower increases (4%–4.5%), citing the district’s sizable fund balance and uncertainty about late state aid or unexpected real‑estate transfer revenues.

Budget caveats and outside dependencies: Staff warned several drivers remain uncertain. Real‑estate transfer tax revenue can spike (staff noted a $2.1 million transfer tax year tied to warehouse activity in recent years). The district’s health‑insurance rate has risen sharply in the last two years (15.4% then 11%) and may not normalize quickly. Cyber‑charter enrollment has climbed to 267 students as of April 2025, and the district said pending state legislation on cyber‑charter reform could reduce that cost but is unresolved. Staff also noted the state’s homestead/farmstead and other gambling‑related distributions changed late in the process, altering household impacts when applied to sample median assessed values.

Clarifying context: Barwin emphasized that assigned fund‑balance amounts are not irrevocably committed and can be reassigned by the board; however, some assigned dollars are tied to specific capital plans. Staff also said the state adequacy/one‑time funds that helped avoid deficit spending in the prior year remain uncertain for future years and cannot be relied upon as recurring revenue.

What the board debated: Board members traded off two core concerns — protecting taxpayers in the near term and preserving fund balance for planned capital and operating needs — and several requested updated calculations (including the effect of recent homestead/farmstead increases and revised interest revenue) for the May 27 meeting. No formal tax‑rate vote was taken at the committee meeting.

Ending: The board agreed to reconvene budget discussions at its May 27 meeting and invited PFM to return to present options for financing remaining capital needs. The board’s scheduled final budget vote remains June 9.