District finance update: governor's proposal, special-ed and cyber-charter costs highlight budget challenges

District finance staff briefed the board on state budget proposals and the district’s 2025–26 budget outlook, highlighting limited gains in basic and special-education funding but continued pressure from tuition outflows and program costs.

Presentation summary: Finance staff summarized elements of the governor’s proposed budget, including proposed increases of about $75 million for the basic education funding formula and $40 million for special education, plus multi-hundred-million proposals for adequacy and tax-equity adjustments in the Ready-to-Learn program. Staff cautioned that district eligibility for some targeted equity funds is driven by wealth measures; Northwestern Lehigh’s relative local wealth makes it unlikely to receive a portion of the largest targeted aid pools in the near term.

Local impact: The finance presentation showed Northwestern Lehigh’s projected increases under the governor’s proposal would yield an estimated $44,452 increase for basic education and $63,915 for special-education funding — a combined provisional increase of about $108,367 for the district, pending final state action.

Special-education and external placements: Board members asked for and received data on actual expenditures for contracted services and external placements. Staff reported the district paid roughly $3.5 million to outside providers for regular-education services and about $2.3 million for special-education services in the most recent reported year (figures cover contracted professional services and facility placements; they exclude district professional salaries and benefits). The district uses multi-year averages for some contract tuition calculations.

Cyber-charter and charter tuition outflows: Board discussion focused on tuition paid to cyber charter schools and charter operators. Staff reported approximately $655,000 in cyber-charter tuition expenditures driven in part by student transfers. Board members noted that changes to the cyber/charter tuition formula would substantially reduce annual budget pressure if the tuition paid to those operators were reset or redirected to the home district.

Cost drivers and other budget items: Finance staff flagged several cost increases included in a working budget for 2025–26: a projected electricity cost increase (about $100,000), LCTI tuition increases (about $122,000), additional materials tied to a science textbook/adoption ($270,000), a projected cyber/charter increase ($50,000), and a projected increase in debt service ($50,000). Workers’ compensation experience was expected to reduce costs modestly.

Process and timeline: Staff said the district is finalizing staffing plans and will present the proposed final budget in May, adopt a proposed budget in May, and consider the final budget for adoption in June, with workshops in April and June. Staff said some revenue estimates (including state allocations) will be updated as the state process proceeds.

Quotes and context: Finance staff summarized that the Ready-to-Learn adequacy/tax-equity funds are targeted and based on district wealth and per-student spending: “The adequacy and the tax equity are all based on the wealth of the district,” staff said. Board members discussed the recurring annual operating gap that arises from outflows and fixed costs, and the ways cyber/charter payments contribute to that gap.

Ending: Staff will continue to refine revenue and expenditure estimates for the May budget presentation and urged board members that several variables remain subject to state action and vendor pricing.