Council Rock reports $7.4 million better-than-budget finish; board asked to transfer $6.5 million to capital reserve

Council Rock School District ended fiscal year 2025 with revenues and expenditures that yielded a $7,400,000 better-than-budget result, and district staff on Oct. 16 asked the finance committee to forward several interfund transfers to the full board for approval.

Toby Rapp, director of business administration, told the committee that the general fund finished the year with $3,403,575 more in revenue than budgeted, driven by $2,000,000 above budget in local revenue, $895,000 above budget in state revenue and $488,641 in additional federal receipts. "These are unofficial numbers. They have not been audited," Rapp said, adding that the $7.4 million variance reflects conservative budgeting and some timing differences in purchases and projects.

Why it matters: the fund balance affects the district's credit rating, borrowing costs and flexibility for capital projects. Rapp said the district's total ending fund balance (before the proposed transfers) was $37,818,009.83, and that keeping a healthy unassigned fund balance helps maintain low interest rates when the district issues bonds.

Key numbers and transfers - Final net improvement vs. budget: $7,400,000 (revenue exceeded expenditures by that amount). Rapp reported total revenue was $3,403,575 above budget. - Salaries were $1,800,000 higher than budgeted, driven by overtime, summer work and additional classroom assistance; Rapp noted some of those higher salary costs increase state retirement-related reimbursements. - Ending total fund balance (pre-transfer): $37,818,009.83.

On transfers, Rapp requested that the finance committee recommend the following to the full school board for approval: - Transfer $6,500,000 from the General Fund to the Capital Reserve Fund to help fund future capital projects. (Request to approve at the next board meeting.) - Reduce the board's committed balance for "Future Educational Initiatives" by $4,300,000, leaving a committed balance of about $3,500,000 for those initiatives. - Transfer $10,951 from the General Fund to the Food Service Fund representing a donation from Giant used to cover student meal debt. Rapp said a planned transfer of roughly $202,150 to cover high-school free-meal costs that the district often makes was not needed this year because of favorable program-year balances.

Rapp presented the fund-balance classification required by the Governmental Accounting Standards Board and explained that "unassigned" is the most flexible portion. After the proposed transfers, staff showed an estimated unassigned fund balance of $20,786,236 and an ending fund balance of about $31,318,983; the unassigned balance would equal roughly 7.1% of next year's budgeted expenditures ($293 million), under the district's 8% policy ceiling.

Other funds and longer-term accounts - Capital Reserve Fund: Rapp reported interest revenue and project spending; the pre-transfer balance was $14,351,241. - Capital Projects Fund: ending balance reported at $5,654,006.60, much of it in escrow from completed projects. - Food Service Fund: began near $2.9 million, had revenues of about $4.8 million and expenditures of about $4.9 million, for a net deficit of roughly $184,977; Rapp said the program-school (elementary/middle) deficits offset high-school surpluses this year. - Health Care Fund (employee benefits): ending balance reported at $22,257,473, down from about $25.5 million the prior year after a $3.5 million draw; Rapp said the district has been keeping premiums relatively low and is approaching the district goal of an $18 million target balance. - Debt Service Fund: the district collected about $20,580,000 in taxes for debt service, spent $17,915,075 and ended with roughly a $2.7 million increase in the fund.

Act 1 index and tax-setting context Rapp reviewed the Pennsylvania Department of Education's Act 1 index, which the department set at 3.5% for the 2026-27 budget. He explained that Council Rock's calculated index (based on market value/income aid ratio) is 1.15 and therefore the district will not receive an adjusted (higher) index. Rapp reminded the committee that the district cannot raise taxes above the Act 1 index without an exception or voter referendum; exceptions are typically available for increased special education costs or higher debt service.

Board discussion and concerns Several board members praised the business office's work while also expressing concern about recurring surpluses and past tax increases. Joe Hidalgo, school director, questioned whether the district had raised taxes higher than necessary in prior years given recurring surpluses and said taxpayers on fixed incomes feel those decisions: "I could sleep at night on the board, but it's not my money," Hidalgo said.

Michael Roosevelt, school director, supported using surpluses for capital, noting the district's long-term master-plan cost estimates for building projects and urging steady contributions to capital/reserve accounts so future borrowing would be manageable. Another board member, identified in the record as Melissa, suggested staff produce a consolidated five-year comparison showing the June budget (the legally required budget passed in June), subsequent audited results and the eventual surplus or deficit, to help the board and public understand how year-end results have trended.

What the committee will act on next No final board vote occurred at the finance committee meeting. Rapp asked the finance committee to recommend the listed transfers and adjustments to the full school board for formal approval at the next board meeting. The requested transfers and the Act 1 index information were the primary action items the committee is forwarding.

Ending Rapp and committee members said staff will circulate revised slides and a short glossary of fund-balance terms (nonspendable, restricted, committed, assigned, unassigned) and that paper copies will be provided to members before the board meeting. The finance committee adjourned after roughly 72 minutes of discussion.

(Quotes and attributions are drawn from the Oct. 16 finance committee meeting transcript.)