Harrisburg City SD presents $211.8 million proposed final budget, recommends 2% mill increase amid receivership exit debate

HARRISBURG, Pa. — The Harrisburg City School District on Tuesday presented a proposed final budget of $211,828,370 for fiscal 2025–26 and recommended a 2% tax increase — reported in the presentation as a 0.62‑mill raise — even as outside consultants have advised a larger sustained increase to meet five‑year fiscal projections tied to an exit from receivership.

District Chief Financial Officer Dr. Marcia Stokes said the proposal reduces total spending by about $5.4 million (2.55%) from the current year, largely because one‑time federal ESSER pandemic funds ended, and that 66% of district revenue is still projected to come from state subsidies. “You can see that this proposed final budget has a 2% or 6.62 mil increase,” Stokes told the board, adding the proposal includes conservative assumptions about state supplements and places some contingency in the budgetary reserve.

Why it matters: Harrisburg remains under a receivership exit petition with the Pennsylvania Department of Education; PDE and the district’s outside financial advisers, Public Financial Management (PFM), are assessing whether local effort and multi‑year revenue projections are sufficient for the district to return to local control. PFM’s five‑year stress test recommended a 4.81% increase to achieve balanced baseline projections without relying on uncertain state supplemental funding. Board members and the receiver said that choice — more immediate local tax revenue versus reliance on state actions — is central to whether Harrisburg can secure and sustain an exit from receivership.

Topline numbers and assumptions

- Proposed final budget: $211,828,370. - Recommended local tax action in the presented proposal: 2% mill increase (0.62 mills). - PFM “exit” scenario presented during prior training: 4.81% (PFM projection used for five‑year solvency modeling). - District reliance on state revenue: roughly 66% of projected revenue, with 42% coming from Basic Education Funding (BEF) per Stokes’ slides. - Federal revenue (largely ESSER and similar grants) is projected to decline from about $20.8 million to $11.6 million due to ESSER expiration.

Stokes walked the board through the district’s revenue mix, spending plan and tax scenarios. She said the proposed budget counts 50% of the governor’s proposed adequacy supplement (about $3.7 million in the presentation) and 100% of an annual tax‑equity supplement (approx. $721,299), while leaving a portion of estimated state funds in the budgetary reserve in case those supplements are not enacted at the projected levels.

“Everything I’m presenting to you is based on assumptions and based on estimates,” Stokes said. She emphasized the district uses a zero‑based budgeting approach and reviewed shifts in expenditures including reduced federal grant spending and continued large charter school tuition projections (her packet showed roughly $30.2 million projected for cyber charter tuition in 2025–26).

Tax scenarios and local impacts

Stokes showed three example scenarios for household tax bills: the 2% proposal in the proposed final budget, the PFM 4.81% exit scenario, and a theoretical maximum under the Act 1 index. She said the special structure of property tax relief and changes in the number of owner‑occupied homestead exemptions in Harrisburg mean some owner‑occupied homeowners could see a lower tax bill despite a mill increase.

Using two example assessed values the presentation showed: under the proposed 2% scenario a $100,000 assessed property would see a modest decrease of about $22.11 in annual tax bill in the district’s slides for one owner‑occupied example; under the 4.81% scenario that same property would realize an increase under the PFM scenario. The district’s slides attributed much of the complexity to the combination of higher state property tax relief allocations and a decline in taxable assessed values — Stokes said assessed values showed approximately a 6.99% decline (about $112.4 million) compared with the prior year’s certified values the district used for scenario modeling.

Receiver and board cautions

Receiver Dr. Suske and several board members pressed the board to weigh long‑term consequences. Dr. Suske framed the PFM 4.81% as the conservative path most likely to produce balanced five‑year projections used in the exit petition: “That is why that 4.81% was utilized … to submit the secretary of ed to say, are we going to be financially solvent five years from now?” she said. “PFM was not allowed to do that in their projections” — a reference to PFM’s conservative approach of not counting uncertain state supplements.

Board members asked technical and policy questions about the assumptions: how much of the adequacy supplement to count (the administration used 50%), how to weigh assessed value uncertainty, the estimated tax‑equity supplement, and the district’s plan for the capital reserve and debt service. Stokes said the district will post the full PDE budget form and a 30‑page budget handout to the district website for public inspection and return on June 24 for final adoption, at which point the board will set the tax rate.

Formal actions and next steps

As part of the business services report, the receiver approved posting the proposed final budget for public inspection and scheduled a final adoption hearing for June 24. The board also approved other routine business items to be brought forward on the May 27 consent agenda and approved immediate actions the administration recommended this evening (see “Votes at a glance” below for a list of outcomes taken during the meeting).

District staff said the proposed final budget is necessarily an interim document: Stokes told the board she expected changes between May 13 and the June 24 adoption date once federal allocations and final state budget action (if any) become clearer.

Ending

Stokes told the board she would continue to update the budget draft and that district staff would recommend final numbers for adoption on June 24. Board members and the receiver said they expect to revisit assumptions in light of PFM’s five‑year projections and potential PDE monitoring conditions tied to exiting receivership.

Votes at a glance (actions recorded during the meeting)

- Proposed final budget presented and approved to be posted for public inspection; adoption scheduled for June 24, 2025 (administration presentation: Dr. Marcia Stokes). Outcome: approved for posting and further action. - Treasurer appointment: Dr. Marcia Stokes appointed school board treasurer for 07/01/2025–06/30/2026. Outcome: approved (administration). - Transfer of proceeds from sale of Wayne Avenue to capital reserve (amount stated by administration): approved to be brought forward on May 27 consent agenda. - Ratification of vendor payments, payrolls and other routine business items: moved forward to May 27 consent agenda or ratified where noted. - Scottish Rite Masonic Temple tax settlement (post‑2024 code changes): approved as presented (administration). - Other personnel, operations and academic items listed in meeting packet were moved for approval on the May 27 consent agenda.

Speakers quoted in this article came from the meeting transcript and are listed in the article’s speaker whitelist.