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PFM warns William Penn School District it will need continued state funding to avoid long-term deficits
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Summary
PFM presented multiyear projections showing William Penn School District faces a $1.4M shortfall next year and larger long-term deficits unless state adequacy and tax-equity supplements continue; a scenario extending those supplements for five years largely eliminates the deficit, board to begin 2026 budget process in January.
Ian Tyson, a director at Public Financial Management (PFM), told the William Penn School District board on Dec. 5 that the district’s budget depends heavily on state funding and could face persistent deficits if recent adequacy and tax-equity supplements are not continued.
Tyson, who led a multiyear financial projection for the district, said local sources account for about 41% of the district’s total revenues while state sources account for a little under 60%, and that salaries and benefits make up over half of expenditures. “The kicker at the end will be that you do need that funding from the state to sustain yourself over time,” Tyson said.
The presentation modeled a conservative baseline that holds a $5,000,000 special carve-out flat at $5 million per year and assumes a lower, long-term Commonwealth funding level (roughly $300,000,000 statewide, allocated in the model as $250M through the BEF formula and $50M for special education). Under that baseline — which also factors in restoring staff and services cut in 2025–26, existing debt service for the Cypress Street project, and growth assumptions for salaries and benefits — the district would see about a $1.4 million shortfall in 2026–27 and a larger cumulative deficit in later years.
Tyson said he modeled salary growth consistent with current contracts (Act 93 administrators at 3%, teachers at 3.5%, school safety officers at 2%, and other salaries at 2.5%) and assumed benefits (health insurance) would grow about 5% annually. He also included repayment of recent lease-leaseback bonds and short-term tax revenue anticipation notes in the debt-service forecast.
The consultant showed an alternative scenario that continues adequacy and tax-equity supplements for five additional years. That scenario increased the total modeled funding pool and reduced the long-term shortfall dramatically — from a projected roughly $18 million in the final baseline year to under $300,000 — effectively balancing the projections over the five-year window in PFM’s model.
PFM also flagged a near-term budget benefit from changes to the Commonwealth’s charter tuition methodology: using the new approach, PFM estimated William Penn would see nearly $2 million in savings on cyber charter payments starting next year, although Tyson cautioned the Pennsylvania Department of Education had not yet published final calculation methods.
Board members and staff raised several follow-up items during questions: a request to break out the $5 million carve-out as a separate line in future materials so the district can track it; a request for a glossary of acronyms used in the presentation; and a request for analysis of how a major member’s exit from the health-care consortium (Upper Darby Township) could affect premiums. District staff provided a first look at insurance rates from the DCIU Healthcare Trust showing an average increase of 6.82% (medical 9.48%, prescription flat) and said a second look is expected in March.
Tyson noted that even if the district applied the Act 1 index (the legal maximum tax increase without referendum) each year, the added tax capacity over five years — roughly $13 million to $14 million in his example — would not close the long-term deficit alone. He recommended monitoring governor’s proposed funding amounts annually and phasing restorations of cut services as revenue becomes available, rather than restoring all services immediately and risking future cuts.
On process, staff said the district will start cabinet and principal meetings in January to begin the 2026–27 budget cycle; the budget advisory committee will meet February through May with targeted budget adoption in May 2026 and a final budget on June 22, 2026. The board also solicited community nominations for participation on the budget and finance advisory committee.
The meeting included no formal motions or votes on budget decisions; Tyson’s presentation was informational and intended to guide planning. The district’s 2024–25 audited fund balance was not yet final, so PFM’s projections were shown starting from a zero fund balance pending audit results.
