Kennett proposed final budget rises to Act 1 index; district cites tax‑appeal losses, earned‑income changes and two special‑education hires

The Kennett Consolidated School District finance committee reviewed a proposed final 2025–26 budget that raises the district’s real‑estate tax levy to the Pennsylvania Act 1 index of 4%, citing a series of revenue shortfalls and a small number of added positions intended to meet mandated services.

The district presented the proposed final budget as the second of three approvals required this spring; final adoption and tax‑rate setting will occur at the June board meeting. Administration said the proposed final budget itself carries no immediate additional tax actions beyond the Act 1 index but will be the basis for the June tax rates.

Why the change

District CFO Mark Tracy told the committee the budget moved from the preliminary proposal to the proposed final primarily because of revenue reductions that were recognized after the January preliminary figures were set. Specific items cited:

- Tax‑assessment settlements: The district reached a settlement on two large properties formerly assessed to Genesis Healthcare in Kennett Square; the district expects to recognize a revenue reduction of $323,000 once the revised assessments and court orders are processed.

- Earned‑income tax change in East Marlborough: Keystone Collections Group advised administration that East Marlborough is likely to enact a 0.5% earned‑income tax that would begin Jan. 1 (mid‑fiscal year). Keystone estimated the full‑year loss at $416,000; the district recognized half that amount — $208,000 — for 2025–26.

- State subsidies: The proposed governor’s budget changed historic assumptions. The district had budgeted a 2% increase in Basic Education funding in January but later reduced that estimate, reflecting the governor’s proposal. The adjustment reduced Basic Ed revenue by about $96,000 (overall Basic Ed adjustments cited around $113,000 when combined with related items).

Budgetary additions and adjustments

Administrators also described areas where spending increased or were added back into the proposed final budget:

- Two special‑education positions (learning support) were added — one at Greenwood and one at New Garden — after the district reviewed requests and the CCIU special‑education audit identified staffing gaps. Administration said the new positions were prioritized among a larger list of about 30 staffing requests that were vetted; salary and benefits for the newly added positions and other changes total about $335,796.

- Credit recovery (summer/supplemental instruction): Administrators plan to fund a credit‑recovery program for secondary students; the proposed budget includes a $60,000 appropriation from fund balance for that program for 2025–26.

- Medical/benefit renewals: The district reported a comparatively favorable medical insurance renewal (about a 6% roll), lower than many neighboring districts that saw large increases.

Net impact and taxpayer effect

CFO Tracy said net revenue reductions of about $453,605 combined with expenditure increases (roughly $356,000) explain the swing from the preliminary calculation to the proposed final budget. For a typical residential property, the district presented the change as an increase of $246 over last year’s tax bill under the proposed final levy; that figure reflects the 4% index and the newly recognized revenue/expenditure changes (administration emphasized that $246 is the total increase over the prior year, not an additional increase beyond earlier published numbers).

Fiscal outlook and next steps

The administration noted longer‑term budget pressures: declining enrollment (which lowers some state aid), the possible loss of a mental‑health PCC grant worth about $173,000 if it is not renewed, and expected additional operating needs tied to two larger elementary schools the district is building (additional custodial and maintenance costs). Administration estimated the district will need roughly $631,000 more in the 2026–27 fiscal year to meet known obligations and routine rollovers.

Board members asked for contingency planning in the event of deep federal or state cuts to entitlements such as USDA meal reimbursements and federal education grants; CFO Tracy said the district would assess the depth of cuts and respond over the year, noting many grant‑funded positions are payroll‑intensive.

Administrators plan to present the proposed final budget for board approval next Monday; final adoption and tax rates will be set during the June board meeting once additional certainty is available.