Cheltenham finance committee flags $5.8M preliminary budget gap for 2026–27; options include fund balance, cuts or limited tax increase

Administration told the finance committee that preliminary numbers for the 2026–27 school year show total projected expenditures of about $146.7 million against projected revenues of roughly $140.0 million, leaving a roughly $5.8 million shortfall.

"We have a $5,800,000 gap to fill somewhere along the line between now and the end of the school year," said the administration presenter. He noted the projection does not include a tax increase and said the gap could be covered by a mix of tax increases, reductions, or use of fund balance.

Administration identified several drivers of the shortfall: a projected approximately $1.6 million decrease in real-estate-tax revenue tied to assessment changes and commercial tax appeals, and a large jump in health-insurance premiums. "The biggest factors driving that increase are wages and benefits, with the largest ... being our health insurance premium increase of 22%, which is roughly a $2,000,000 increase," the presenter said.

Special education tuition was called out separately: the administration said recent growth in out-of-district placements and limited private-school seats is shifting costs to the district and raising special-education tuition spending.

Board members pressed for clarity on how much of the shortfall is structural. Board member Daniel Schultz summarized the drivers and urged caution about relying on reserves: "It is not sustainable to pay for ... balance a budget using cash, using capital reserves," he said, and called for a multiyear plan to right-size recurring revenues and expenses.

Committee members also discussed statutory constraints on raising taxes. Administration noted the district's Act 1 index and tax-limit rules, observing that a full $5.8 million covered only by taxes would represent roughly a 6.47% increase in the tax levy, while the district's Act 1 cap is about 3.5% (and projected base indexes of roughly 3.1–3.2 percent in coming years), limiting the practical amount that can be raised without exceptions.

Administration said it is considering a combination of approaches: targeted expenditure reductions, negotiating on contracts or benefits, drawing from fund balance as a one-time measure, and pursuing state grant opportunities. Upcoming board agenda items include a planned resolution to apply for a state capital improvement grant that administration suggested could be timed to help with capital needs rather than recurring operations.

The committee did not adopt a final solution at the meeting; administration will refine the budget, present proposals for closing the gap, and return to the board for action as required.