Colonial School District previews 2025-26 budget; administration recommends 3.48% tax increase and $1 million fund-balance use

At a Jan. 13 meeting of the Colonial School District finance committee, district finance staff presented the first look at the proposed 2025-26 budget and recommended a 3.48% tax increase together with the use of $1,000,000 from the general fund balance to close the gap between projected revenues and expenditures.

The presentation showed the district's total general fund balance at about $27.8 million with an unassigned portion of $12,980,200 measured as of June 2024. District staff said Pennsylvania Department of Education rules limit unassigned general fund balances to 8% of the general fund; to comply, the administration recommended transferring $326,250 from the unassigned to the assigned fund balance, which would raise the assigned balance from about $4,000,000 to roughly $4,300,000.

The administration described the $1,000,000 use of fund balance as a budgeting challenge for department heads and principals: staff were asked to seek cost savings or additional revenues so the district would not ultimately draw the full $1,000,000. The recommendation as presented is a planning figure at this early stage; the finance director said the district will hold three more budget presentations before a proposed final budget in April and final adoption in June.

Officials said the 3.48% tax increase falls below the Act 1 index ceiling of 4% and is calculated under the state’s initial measurement rules. Finance staff emphasized the district is constrained to remain under the Act 1 limit, citing an initial measurement of 3.85% earlier in the budget process.

Staff highlighted several revenue and expenditure drivers. Local revenues comprise the bulk of district revenue, with real estate and earned income taxes noted as the largest line items. Transfer tax receipts were higher than the prior year because of two large real-estate transactions; staff reported year-to-date transfer taxes of about $2.1 million versus roughly $825,000 the prior year and said the budgeted transfer tax figure remains a conservative $3,000,000. State and federal revenue changes were also discussed; staff attributed a decline in federal revenue to the closeout of remaining COVID-era grants.

On the expenditure side, staff cited contractual salary and benefit obligations, an expected state-mandated employer retirement rate increase (noted to move back toward 34% of eligible salaries), and a weighted-average projected increase in healthcare costs of roughly 7%. The administration described a baseline increase in expenses of about 3.34% over the prior year, or roughly $5.2 million.

The presentation identified several proposed program investments that would be discussed further in the budget process: expansion of the Chromebook 1:1 program for kindergarten and first grade (budgeted within a $1.2 million increase to supplies and textbooks), replacement of classroom projectors with interactive touchscreen TVs (estimated approximately $300,000 for the initial phase), expansion of security camera licenses at elementary buildings (an estimated $40,000 in licensing costs; staff noted a $199,000 PCCD grant will cover most equipment costs), and a proposed Act 91 volunteer firefighter and EMS rebate program (administration estimated about 132 volunteers in the district; a $250 rebate placeholder would cost about $16,500 if roughly half qualify; a $500 rebate would cost about $33,000).

Staff also described a placeholder for four additional professional-position hires in the budget based on enrollment projections; the presentation estimated approximately $340,000 in total budget impact for those four positions, including benefits. Debt-service and interest-object lines were discussed; staff said recent refinancing will yield some relief in debt service in coming years.

Committee members asked clarifying questions about transfer taxes, the size and timing of enrollment increases at the Colonial Elementary School (CES) that are driving staffing and renovation decisions, and equipment warranty and capitalization policies for interactive TVs. Staff said the CES renovation remains part of prior board actions and will be coordinated with enrollment and facility planning.

No formal vote was recorded at the finance committee meeting on Jan. 13. The administration said the $326,250 transfer would be placed on the board agenda for a forthcoming business meeting and that a resolution to set future compensation for the district’s appointed CPA would be drafted for the upcoming school board meeting.