Keystone Central School District officials on April 3 presented preliminary budget scenarios that narrow a projected deficit and asked the board for direction on whether to include either a 3.55% or 1.78% millage increase in the proposed final budget due in May. Administration said renewed health-insurance rates are lower than budgeted and other revenue and expense assumptions change the shortfall but do not eliminate it.

Assistant Superintendent Joni (last name not specified in transcript), presenting the general fund update, said Benecon’s renewal came in at 11.8%, below the 15% the district had budgeted, producing an additional reduction in costs she described as roughly $307,000. She told the board that combined adjustments cut the original deficit and left the district with a projected deficit now described in presentation materials as 3.7%.

The presentation showed three scenarios: no tax increase (projected local real estate revenue about $24.7 million), a 1.78% millage increase (estimated to raise about $490,000), and a 3.55% millage increase (estimated to raise about $980,000). Administration recommended the 3.55% option as the first preference and 1.78% as a fallback, saying the larger increase would move the district’s projected unassigned fund balance from roughly 2.9% (no increase) to about 4.0% by the end of 2025–26. Board materials noted a “healthy” fund balance target of 7%–8% though presenters emphasized that target is guidance, not a statutory requirement.

Board members pressed for context on state funding formulas. Joni reported that the local effort rate used for adequacy funding has been frozen (she cited the value given in the presentation as 1.31031 or similar), but other state funding streams — basic education and special education — are calculated differently and could still change depending on statewide actions. She said the district’s share of the state basic education bucket is materially larger than its share of the adequacy bucket and that shifting of funds into adequacy has reduced the district’s relative benefit.

Board members also reviewed the district’s debt position. Chief financial staff (name not specified) said the district’s outstanding bond principal totals $43,365,000 for projects issued since 2020 and 2023. Presenters noted that debt-service payments are scheduled and have been included in budget planning.

Administration asked the board to give guidance at the April work session and to be prepared to vote at the regular voting session next week on which millage option to include in the district’s proposed final budget submitted to the Pennsylvania Department of Education.