East Penn SD projects $3.1 million gap for 2025-26; administration outlines revenue assumptions

East Penn SD finance staff presented a preliminary 2025-26 budget overview at the board meeting, saying the district currently projects a $3.1 million structural deficit and an ending general fund balance of about $22.6 million if current assumptions hold.

Administration framed the presentation as an early look at fund balance and revenue assumptions that will be refined over the spring budget process. “We are very early in the budget process,” Mr. Sall said, adding that the district will update figures as more information becomes available and will present proposed expenditures at later meetings.

The presentation traced fund-balance changes across recent years. The district’s audited 2023-24 ending fund balance was reported at $26.2 million. Administration’s January 2025 estimate projects the 2024-25 fiscal year to end near $25.7 million after planned ESSER spending, and the 2025-26 draft budget shows a projected ending balance near $22.6 million after an estimated $3.1 million deficit. Mr. Sall cautioned that several items — including network upgrades and a small structural deficit — are still being worked through.

Why it matters: the early revenue and fund-balance estimates guide later decisions about staffing, capital investments and possible tax rates as the district develops a final budget for adoption in June. “Our goal is to continue to provide high-quality, equitable educational opportunities for all students in the district while also recognizing that obligation to continue to sustain the financial health of the organization,” Doctor Campbell said in opening remarks.

Key revenue assumptions and highlights - Real estate taxes: the draft budget includes a 4% real estate tax increase tied to the Act 1 index. Mr. Sall showed the standard tax-levy calculation (assessed value × millage, less homestead/property tax relief, multiplied by a collection percentage) and said the district used a collection rate of 96.2 percent in projections. - Local revenues: administration trimmed its interim-tax estimate after observing trends, and projects earned-income-tax receipts roughly 3 percent higher for 2025-26 based on current collections and information from the district’s collector, Berkheimer. - Transfer taxes and investment income: real-estate transfer taxes are volatile and difficult to forecast; interest earnings were adjusted downward to reflect recent softening in rates. - State revenues: administration built a conservative 3 percent increase into state revenue lines for budgeting purposes. Mr. Sall compared the district’s preliminary figures to the governor’s recent budget proposal, which would shift some funding into Ready-to-Learn block grants and adequacy/equity supplements. Administration estimated the governor’s proposal would be roughly $300,000 above the district’s preliminary revenue assumptions for next year, but noted those are proposals, not final appropriations. - Federal funding and ESSER: administration said the original ESSER grant funds had been set aside and incrementally spent; the district expects only about $50,000 remaining in the ESSER-offset pot at the end of the coming year. Mr. Sall commented on a recent federal administrative action and related litigation, noting a judge issued a temporary restraining order that, in the short term, keeps previously appropriated funds available but uncertainty remains for future appropriations. - Transportation subsidy: subsidy estimates for pupil transportation are tied to the prior year’s actual transportation expenditures; the district saw a large increase in transportation costs in 2024-25 and expects a corresponding increase in state subsidy calculations.

Fund-balance composition and policy context Mr. Sall walked the board through the five conventional fund-balance categories (non-spendable, restricted, committed, assigned and unassigned) and stressed that headline fund-balance totals can overstate immediately available dollars. He said committed funds include board-designated ESSER offsets and a technology infrastructure reserve that can only be repurposed by board resolution.

Unknowns and next steps Administration emphasized the early-stage nature of the numbers and said they will continue to refine revenue and expenditure assumptions through March and April. Planned next steps include detailed expenditure presentations, a long-range fiscal and capital plan in March, and a final budget for board adoption in June.

The board did not take action on the preliminary figures; administration will return with expenditure recommendations and updated revenue estimates at future meetings.