Kennett Consolidated SD presents tentative 4.17% preliminary budget, eyes referendum exception if needed

Kennett Consolidated School District finance staff on Feb. 2 told the finance committee the district's preliminary 2026-27 general operating budget would total about $112,176,399 and generate a tentative 4.17% millage increase, a rise that would put the district above the state's Act 1 index and require either a referendum exception or other formal action.

The presentation, led by finance presenter Mark Tracy, framed the figures as a work-in-progress. "It is a tentative tax rate," Tracy said, adding that the board will vote on a preliminary budget next week and that the final budget with binding tax implications comes in June. Tracy said the district has roughly $8 million in a dedicated debt-service reserve and an excess of about $425,000 that could seed future high-school capital work.

Why it matters: most of the district's revenue (about 77%) is local. Tracy said the district expects roughly $74.3 million from real-estate taxes and flagged a roughly $1 million federal-title programs line as a wild card: if federal grants were eliminated, program and staff reductions would likely follow. "If we lose federal programming funding total, we'll have to go back to the drawing board," Tracy told the committee.

Key details and options: the preliminary budget as presented would push the millage to an estimated 4.17%, which Tracy estimated would equal about a $268 annual increase for an average residential assessment. The committee reviewed three Act 1 options: (1) an accelerated opt-out (notify PDE in December and commit to staying at or below the index), (2) seeking a referendum exception via PDE's module (typically for debt, PSERS spikes, or special-education cost differentials), or (3) placing a referendum question before voters (rare for general-operating budgets). Tracy said only the special-education-cost differential or a large PSERS spike would likely apply to Kennett.

The presentation stressed both the drivers of the proposed increase and possible mitigations. Staff identified three main drivers that contribute to the gap above the index: growth in contracted special-education and intermediate-unit services, an increase in purchase/professional services, and salary/benefit pressures (salaries and benefits represent about 61% of the proposed budget). Staff proposed targeted staffing reallocation and a net reduction of five professional positions and one administrative assistant (largely via attrition) and a net $814,000 change in contracted services, with specific vendor negotiations to come.

Board questions focused on fiduciary responsibility and detail requests. One board member asked for multiple years of trend data on contracted services and an itemization of the proposed reductions; another urged caution about using one-time fund balance to cover recurring personnel costs. Tracy cautioned that, if the board pursues a referendum exception, PDE will lock in the preliminary-dollar differential approved at submission and the district will not be able to reapply later for additional amounts based on subsequent state-budget changes.

What happens next: staff will submit the preliminary budget and related data to the Pennsylvania Department of Education as required; PDE's referendum-exception module opens in March and will populate with actuals for the special-education exception. The committee plans deeper follow-up reviews of 300- and 500-series object codes (contracted services and purchase services) and multi-year trend analysis before the board's vote on the preliminary budget.

The finance committee did not take a binding vote to adopt the budget on Feb. 2; the presentation was a staff recommendation and a step in the statutorily required process.