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CFO warns of deteriorating fund balance; Elizabethtown’s Act 1 maximum set at 4.3%
Summary
District finance staff told the Elizabethtown board the district is not in receivership but fund‑balance trends are concerning; under state Act 1 rules the district’s maximum tax index without exceptions is 4.3%, and the board signaled it will likely stay at or below that cap.
The Elizabethtown Area School District’s finance director presented a fiscal update at the board’s December workshop, telling directors the district is not in receivership but noting multi‑year trends that could erode fund balance and affect borrowing costs.
"Right up front, we are not in receivership," the CFO told the board while walking through Pennsylvania Department of Education early‑warning indicators. He showed the district’s market value/personal income aid ratio (about 0.49) and described fund‑balance metrics used by rating agencies and PDE to flag districts at risk.
Strickler said the district closed the most recent draft audit with an approximate $5.2 million fund balance and that, under current projections, a projected operating deficit would reduce that balance to roughly $3.5 million. He described the approved preliminary 25/26 budget (a previously approved 2.5% real‑estate tax increase, with 0.5 percentage points directed to capital reserve) and said the district faces a structural challenge: the board earlier approved budget assumptions that now look likely to produce a deficit in the coming year.
On Act 1 — the state law that limits annual property‑tax increases for school districts unless exceptions are granted — administration explained that Pennsylvania’s statewide base index this year is 3.5% and that Elizabethtown’s calculated maximum, without exceptions or a referendum, is 4.3%. Finance explained tradeoffs: a full 4.3% could yield roughly $1.9 million in local revenue; a dedicated 2.5 percentage points for building tax (used in bond planning) would consume much of that increase and leave less for the general fund.
Board members asked whether to pursue exceptions to exceed Act 1; Strickler said pursuing exceptions requires the district to submit a 26/27 budget and supporting documentation to PDE ahead of the next meeting. Several directors signaled they preferred staying at or below the 4.3% maximum, citing work involved for exceptions and the risk of losing certain state funds if the district returns money to the state when exceeding allowable increases.
What the board will do next: Administration asked for a direction at the next meeting so the finance team can prepare any required exception documents or, if the board elects not to exceed, bring the formal Act 1 motion for the December vote window.
