District finance chief outlines $3 million shortfall, presents revenue options to narrow gap

Mister McGinn, speaking for district administration, told the Board of School Directors on May 6 that the district is facing a budget shortfall of just over $3,000,000 for the 2025–26 fiscal year and has identified both revenue and expenditure strategies to reduce the gap.

"I do not have as, exciting a presentation as a trip to Europe. Sorry," Mister McGinn said as he opened his budget overview, then summarized adjustments the district made through April that reduced the deficit by about $462,000. He presented longer-range options including interim tax receipts from new home settlements, modest increases in earned income tax, and potential reductions in fund-balance reliance.

The administration proposed a set of one‑time revenue assumptions tied to ongoing home sales in the Philmont/Philmont-over-55 development and other new construction. Using a conservative average sales price of $750,000 for remaining unsettled properties and assuming six months of interim taxes, McGinn estimated roughly $900,000 in one‑time interim tax revenue and about $1.5 million in total one‑time adjustments if the assumptions hold. He said those numbers would reduce the district—s projected tax increase to roughly 3.19 percent under the Act 1 index scenario.

McGinn and board members repeatedly emphasized the assumptions were conservative and contingent on final assessment runs in June. "I wanted to wait as long as I could to get as much updated information as I have," he said, noting the June assessment run will provide firmer figures to finalize the budget.

Board members asked about contingency plans if those revenues do not materialize. McGinn said the district would likely rely more on remaining fund balance and could face pressure to make deeper expenditure reductions in a subsequent year if interim receipts fall short. "If that would be the case, the district would probably, during that school year, have to rely on the remaining fund balance that they have, and they would be, probably in an even more difficult situation next year," he said.

The presentation reviewed other revenue drivers: potential transfer‑tax receipts from settlements, modest increases in earned income tax revenue, gambling proceeds and sterling tax credits that the district receives through the state, and projected assessment gains from the Crescent Fields and an assisted‑living project. On the expenditure side, McGinn said the district has made staffing adjustments and had a smaller‑than‑expected insurance renewal for April; he also highlighted continuing uncertainty around health‑care cost trends.

Board members pressed for timing: McGinn said updated assessment figures and final options will be presented at the June work session and the June legislative meeting so the board can decide whether to include a capital projects transfer or to rely on fund balance. He urged caution about committing transfers early, recommending the board wait until June to transfer funds into capital projects so the board can confirm year‑end revenue outcomes.

The presentation also noted long‑term considerations: shrinking Act 1 indices in future years could reduce the district—s capacity to raise property taxes without using exceptions or asking for larger increases, which in turn would make rebuilding reserves more difficult. McGinn said rebuilding fund balance and restoring the district—s previous bond rating would likely take two to three years of demonstrating positive trends in reserves.

The board did not take a formal vote during the presentation; McGinn and administrators said they will return with updated figures and budget options at the June meetings.