Souderton Area SD presents proposed final budget; special education costs drive most of the recent expenditure growth

Souderton Area SD finance staff presented the district—s proposed final budget to the policy/finance committees, showing revenue and expenditure trends and citing a sharp increase in special education costs as the chief driver of recent budget pressure.

Mr. Taylor (district finance staff) told the committee the proposed final is being presented now to meet the statutory timeline (adopted at least 30 days before the final budget) and to give the public time to review. He said the district—s objective is to adopt a balanced final budget with no use of fund balance and determine a tax millage that meets that requirement by the June board meeting.

On the revenue side, staff highlighted that local real-estate taxes are the district—s largest revenue source (listed as about $91.8 million in the presentation), followed by earned-income taxes (Mr. Taylor reported positive trends and raised his estimate to $11.0 million). State basic education funding was shown around $11.9 million and federal IDEA and Title funding were listed at approximately $1.5 million and $966,000 respectively. Mr. Taylor noted that federal COVID-relief and stimulus funds are effectively exhausted and absent for the coming year.

On the expenditure side, salaries, Social Security, PSERS pension contributions and health insurance together represent about two-thirds of the operating budget; last year salaries were shown at roughly $60.1 million and health insurance around $11.0 million. Mr. Taylor emphasized that special education expenditures grew by $14 million from 2013-14 to 2023-24 (a 78.5% increase), and nearly $8 million of that increase occurred in the last three years alone. For 2023-24, total special education expenditures were reported near $32 million, or 21.2% of operating expenditures (up from roughly 16% a decade earlier).

The presentation also reviewed debt service: recent principal payments reduced debt service from near $12 million to about $11 million, and planned borrowings for Salford Hills, West Broad and Indian Crest projects are projected to produce future annual debt service near $10.5 million. Mr. Taylor and the administration said the planned capital borrowing schedule was designed to keep amortization timelines manageable (roughly a 20-year schedule) and avoid excessive operating-budget pressure.

Committee members expressed concern about the rapid rise in special education costs and urged advocacy to state and federal legislators for increased funding. Mr. Taylor said staff would continue working to close the roughly $3.9 million gap shown in the proposed final without using fund balance and will present updated figures before the final adoption in June. The committee scheduled a proposed-final adoption vote in two weeks and expects final adoption on June 19 pending further adjustments.