Derry Area SD presents $43.9 million proposed budget for 2025–26, cites rising benefits, cyber‑charter and special‑education costs

Derry Area School District business staff on Thursday presented a proposed $43.9 million budget for fiscal 2025–26 that would hold the district’s current millage steady while using roughly $3.2 million of fund balance to balance next year’s spending.

The presentation, given by Mr. Chapel, outlined projected expenses of about $43.87 million and projected revenues just under $40.7 million, leaving a budget gap that the district would cover with fund balance and a planned $1.5 million transfer to the capital projects fund. “This really is a process that essentially extends for 8, 9 months at a time,” Chapel said as he walked trustees through line‑item changes and a multi‑year view of costs.

Why it matters: the draft shows continuing upward pressure on routine operating costs from salaries and benefits, higher retirement rates from PSERS, steady cyber‑charter tuition and a rising special‑education population — factors that the administration said will constrain the district’s financial flexibility if state or federal support falls short.

Key figures and drivers

- Proposed total expenditures: $43,871,002 (approx.). - Proposed total revenues: about $40,700,000. - Planned use of fund balance to balance the budget: about $3,200,000. - Beginning fund balance (estimated): $10,400,000; projected year‑end fund balance if the budget is approved as presented: about $7,200,000 (unassigned projected at 7.5%). - No millage increase proposed; the superintendent noted this would be the district’s fifth consecutive year without a tax increase.

Major cost drivers cited

- Salaries and benefits: salaries and benefits (excluding special education) are the largest share of spending and the administration projected a $516,219 increase in salaries and benefits for 2025–26. Health insurance was budgeted to rise about 9.4% overall. - Retirement (PSERS): the presentation noted PSERS employer rates were recently certified higher (from about 33.9% to 34.0) and projected further increases over the next several years. Chapel said modeling to 38.5% across seven years would add roughly $700,000 in retirement costs — an amount equivalent to several mills of tax capacity. - Special education: enrollment with individualized education plans rose from 313 to 375 over the 10‑year span in the district’s chart; Chapel said state reimbursements have not kept pace and the district has absorbed roughly $1.1 million in unfunded special‑education costs over the last decade. - Cyber‑charter tuition: the district currently budgets about $1.775 million for cyber‑charter tuition; Chapel showed a 10‑year increase of approximately $729,000 and reiterated calls for cyber‑charter funding reform. - Transportation: the new Smith Bus contract is entering year 1 of 4; the administration said changes such as propane fuel should moderate future costs but reclassifications (for example, charging the transportation director’s salary to transportation) showed some upward movement in that line.

Capital and one‑time needs

Chapel outlined capital‑project requests totaling roughly $1.8 million for the coming year and a planned $1.5 million general‑fund transfer to the capital projects fund. Specific projects highlighted included:

- Grandview Elementary roof work already under way and a slate of secondary‑campus roof restorations and replacements (auditorium roof, locker room area, auxiliary gym, band room) with about $675,000 budgeted for roofs next year. - Stage rigging and curtain work for the auditorium (early estimate shown at $500,000) to address safety and aging equipment. - Pavement and drainage improvements (including work near Recreation Road), fencing, furniture replacement phases and other building‑maintenance items.

Staffing and program notes

- Kindergarten enrollment was reported at 100 students as of the presentation; Chapel urged early enrollment so staffing can be planned accurately. - The administration noted an option being explored to outsource some personal care assistant (PCA) services to a third party (Ignite), which could change how PCA staffing and costs are shown in the budget (contracted services rather than wages/benefits).

Public and board comments

Teacher‑association president Mike Pottinge commented during public remarks on the changing student population and special‑education needs, saying, “Our special ed population has increased by 62,” a point several trustees and the presenter used to explain rising costs in that function.

Next steps

Chapel said the administration will present a tentative budget for formal approval on either May 15 or May 22 and must adopt a final budget in June (draft schedule identified June 26 for final adoption). He also said a finance committee meeting would be scheduled between the presentation and the tentative budget vote to review final adjustments and capital items.

Ending: The budget presentation left trustees with a mix of one‑time capital needs and ongoing cost pressures tied to benefits, retirement rates and special‑education and cyber‑charter tuition. Chapel asked board members and the public to review the full packet posted on the district website; the administration will return with the tentative budget for a formal vote in mid‑May.