Shippensburg Area SD sees multi‑million shortfall; board weighs index increase, reserves and future borrowing
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Summary
District finance staff presented a 26–27 draft showing roughly $80.2M in expenditures against about $75M in revenue under a 0% tax scenario, leaving a multi‑million gap; the board debated using reserves, raising taxes to the 4.7% Act 1 index and phasing borrowing for $20–30M in capital projects.
Caleb Barwin, the district’s finance lead, told the board the draft 2026–27 budget shows expenditures of about $80.2 million and revenues near $75 million under a 0% local tax increase, creating a multi‑million dollar gap. “If we go to a 0% tax increase…we have a $4,500,000 deficit,” Barwin said, adding that assumptions include current state receipts and modest assessed-value growth.
Barwin said the district’s audited general‑fund balance as of June 30, 2025, was $16.7 million, a $442,000 decline from the prior year, and highlighted revenue sensitivities including earned‑income tax (EIT) growth and declining interest earnings as the Federal rate falls. “I think the conservative approach is best,” he told the board when describing assumptions that include no new state commitments beyond confirmed amounts.
Board members pressed staff on options to close the gap. Barwin said moving to the full Act 1 index (4.7%) would generate roughly $1.9 million in additional revenue but would affect taxpayers unevenly because the district spans Cumberland and Franklin counties. He noted an accounting practice in the draft that budgets $3.8 million for debt service while actual cash payments have been nearer $2.8 million, creating a temporary budget buffer that could be used to reduce the projected shortfall.
The presentation called out recurring expense pressures: salaries and benefits now make up about two‑thirds of the budget, medical insurance costs projected to rise about 10% next year, and charter and special‑education tuition and related transportation costs that are difficult to control. Barwin also proposed adding $200,000 to the debt‑service line now to smooth the impact of anticipated borrowing in future years.
Board members and staff discussed the tradeoffs of relying on one‑time or uncertain revenues. Barwin repeatedly cautioned that the district had received roughly $1.2 million annually in recent years from the state’s “ready to learn” adequacy payments but that relying on additional, unconfirmed state funds would be risky. “To count on that is…probably not the best idea unless the state comes out and is committal,” he said.
The board did not take a final tax decision on March 23; members directed staff to continue scenario analysis. Barwin outlined next steps and deadlines: a Budget & Finance meeting on April 13, a proposed‑final budget presentation April 27 and final board action on June 8 (the date the district prefers to align with tax‑bill timing).
