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Board hears options to use Act 1 referendum exception to fund capital needs; no vote taken
Summary
District administrators presented options to either adopt a December resolution to stay within the Act 1 index (4%) or apply for a referendum exception based on special-education over-expenditures that could allow up to roughly a 6% tax increase and a dedicated capital transfer; the board asked for scenarios and deferred a formal decision.
District finance officials presented the board on Nov. 3 with options for the 2025-26 budget, including whether to adopt a December resolution to stay within the Act 1 index (the state's property tax index) or to apply for one or more referendum exceptions that, if approved, would allow the district to increase its tax levy above the Act 1 index.
Business administrator Mr. McGuinn said the Act 1 index for next year is 4% and explained four categories of referendum exceptions: grandfathered debt, electoral debt, special-education expenditures and retirement contribution increases. He said the district is not eligible for grandfathered-debt or retirement exceptions at this time but is projected to qualify for an exception for special-education expenditures based on a comparison of 2022-23 and 2023-24 expenditures. Using current figures, Mr. McGuinn said the special-education exception could generate roughly $933,000 in additional capacity that the board could designate for capital projects.
Mr. McGuinn described two general paths: adopt a December resolution to stay within the Act 1 index, which would begin formal budget work under that constraint, or delay action in December and in January present a preliminary budget and apply for referendum exceptions, then adopt a final budget in June. He emphasized the district would not be required to spend any approved exception; approval would only give the board additional flexibility.
Board members asked about the effect of using an exception to build a recurring capital transfer and whether that would change future borrowing capacity or the effect on residential taxpayers. Mr. McGuinn said setting a capital transfer funded by the extra levy would let the district build a stable millage base that could be used to support future debt service and lower the millage impact of future borrowings. Several board members raised concerns about cumulative tax increases and potential impacts on senior residents, and asked district staff to provide scenario analyses showing per-household impacts for a 4% versus a higher levy.
No resolution or formal vote was taken during the Nov. 3 meeting; administrators said they will prepare options, draft scenarios and present both paths at the next meeting so the board can decide whether to adopt the Act 1 resolution in December or to pursue referendum exceptions.
