East Stroudsburg officials present four tax options as 2025–26 budget shows large projected deficit

Dr. Kelly, a district presenter, told the East Stroudsburg Area School District board’s finance committee on an update to the 2025–26 budget that staff are offering four tax-options for consideration: a 0% increase, a 2% increase, a 3.5% increase and the Act 1 index (5.6%). The presentation showed projected revenues and expenditures under each option and the estimated effects on the district’s general-fund balance.

The report said a 0% increase would leave the district with roughly $188 million in revenue against $211 million in expenditures, producing a projected $24.2 million deficit and a February year-end general-fund balance of about $20.1 million. A 2% increase would raise revenue by about $1.6 million, reducing the projected deficit and moving the February fund balance to about $21.7 million. A 3.5% increase would add roughly $3.2 million in revenue and lower the projected deficit further; a 5.6% increase (the Act 1 index) would add about $5.2 million in revenue and reduce the projected deficit to about $18.0 million, with a projected fund balance around $25.4 million under that scenario.

The presentation also flagged an anticipated $1.6 million loss in assessed value tied to a commercial property (identified in the deck as Exploria) that contributed materially to the revenue shortfall. Dr. Kelly told the committee that district staff have worked for two months to tighten departmental budgets, producing an estimated $2.0 million reduction in planned expenditures through attrition and line‑by‑line cuts without reducing programming in most areas. The presentation noted rising costs in utilities (about $9 million increase), purchased services (including charter and out‑of‑district tuition), and professional/technical services (special education), and a modest decrease in debt-service costs.

Committee members pressed on large fixed costs and fund‑balance policy. One board member asked about the district’s committed and assigned fund balance, observing the district has set aside roughly $24 million in committed funds for future expenses; Dr. Kelly responded that those committed funds are being used as planned to cover items such as pension (PSERS) and health-care costs and that the fund balance will decline as it is used. Dr. Kelly said the district expects a number of retirements in the next several years that could reduce salary costs as higher‑step staff are replaced by less‑senior hires, potentially improving the long‑term fiscal picture if coupled with recapture of cyber‑charter students.

Cyber‑charter enrollment and its budgetary impact drew sustained attention. Dr. Kelly said about 368 students are enrolled in cyber charters; staff aim to market a district-run cyber program expanded to begin at kindergarten (the district currently starts its cyber academy at third grade) and to contact families individually, with a goal of bringing students back to the district to reduce charter tuition outflows. The presentation estimated that recapturing a modest number of students could yield meaningful savings (examples given in presentation materials suggested multimillion-dollar impacts if families returned).

The committee was told the finance committee will review recommendations next month and forward a preferred option to the full board for the preliminary budget; the board may revise the proposal before the June final vote. Dr. Kelly and staff emphasized the presentation is a snapshot based on current inputs and not a final budget decision.

The finance committee did not take a final tax-rate vote at this meeting; work on the options will continue and staff will return with additional detail and supporting materials at upcoming meetings.