Kutztown Area SD projects $1.9 million deficit for 2025–26; board weighs tax increase, cuts and referendum

Presenter (S1) told the board at the Feb. 24 budget planning meeting that the district’s working totals for the 2025–26 fiscal year are $37,842,484 in revenues and $39,784,262 in expenditures, leaving a projected deficit of $1,900,000. "We have revenues total 37,842,484 expenditures net 39,784,262, which results in a deficit of 1,900,000.0," the presenter said.

The presenter framed the shortfall amid three revenue realities: (1) roughly 69% of the district’s revenue comes from local taxes, (2) the state supplies about 30% of revenue and remains under negotiation in Harrisburg, and (3) federal and other sources are a small share. The presenter walked the board through Act 1 rules that cap automatic tax increases at a 4% index, and described one available exception for special‑education costs that could permission the board to raise taxes to a little over 5% if the Pennsylvania Department of Education grants it. Anything beyond that would require a voter referendum held in a primary or general election.

Board members and staff stressed the timing constraints. The presenter noted the district must adopt a budget by June 30 and that the board’s upcoming schedule includes several dedicated budget meetings this spring to develop options. He warned that sale proceeds from a recent building disposition (referred to in the presentation as the Max Otani sale) were included in current projections and that without that one‑time revenue the picture would be materially worse.

Board member (S2) highlighted that the current projection includes roughly $400,000 in net revenue tied to the building sale and cautioned the board that the underlying operating deficit remains. "Positive note of about 400,000. However, that includes the sale of the building," S2 said.

Discussion centered on three types of responses: reduce expenditures (including potential personnel and program cuts), seek additional local revenue under Act 1 and the special‑education exception, or place a referendum before voters to raise the cap above roughly 5%. Board member (S5) urged the board to present the public with a full range of options and not eliminate the referendum option from consideration: "We should be presenting the referendum option or two versions of referendum options next to other expense cutting options," S5 said.

The presenter also shared a five‑year projection that, under current assumptions (including modest annual tax increases and continued health‑insurance inflation), would exhaust the district’s fund balance by about 2027 if no meaningful revenue or expenditure changes occur. The administration said it will return with specific recommended expense reductions and a menu of options aimed at significantly lowering the identified shortfall.

The meeting closed after brief procedural remarks and a motion to adjourn. The transcript records the motion being moved and seconded and the chair calling for a voice vote; the recording ends while the vote is being called.