Sto‑Rox leaders say tax increase likely as district aims to exit financial recovery

Nancy Hines, the chief recovery officer for the Sto‑Rox School District, told the district's monthly recovery meeting that staff expect 2025'26 could be the first of the multi-year improvement years needed to exit financial recovery if projected balances hold, but cautioned the board will have tough choices about capital repairs and taxes.

"We just absolutely cannot wait at the district any longer for them to take a lead role," Hines said of an engineering team the district has requested to assess the junior/senior high school. Hines also reported an unbudgeted IRS liability of $13,903.15, and said the solicitor is reviewing that matter while administration will seek board approval to pay to cap penalties.

Why it matters: Sto‑Rox remains under state-assigned financial recovery supports that bring extra staffing and grant opportunities, but officials and staff said the label carries a stigma and limits district independence. Leaders told the meeting those supports have helped stabilize operations, yet the district must show consecutive improvement in its multi-year projections to qualify to move from recovery to monitoring.

Technical advisers from PFM and district business staff outlined the budget math facing the board. Scott Reed of the business office said early 2026'27 budgeting work shows a preliminary shortfall "just under $740,000," and that recent estimates including health-care premium increases and potential salary-contract changes could push the gap toward $1,000,000. Reed said the board will be presented options before the end of the fiscal year, including levying the Act 1 index increase.

"The max option'the Act 1 index shown in the presentation'would generate roughly $750,000," Reed said, adding household-impact examples (a $50,000 house would pay about $87.41 per year for each mill). He and Chief Recovery Officer Hines emphasized sensitivity because Sto‑Rox serves a high-poverty community.

Enrollment and charter costs were highlighted as central drivers. Reed and PFM staff said K'12 enrollment has held near 937 students this year, and the district currently projects next year's charter-school tuition obligations around $13 million. Reed detailed per-student tuition estimates used in PDE reporting: roughly $14,000 per year for a regular brick-and-mortar student and nearly $38,000 for an IEP student; cyber-charter tuition is lower after recent state reforms.

Steven Ramirez of PFM said state funding changes this year materially benefited Sto‑Rox by reducing special-education charter costs and that audits and reconciliations now underway are clarifying prior-year spending. "I'm very, very optimistic and very supportive of kind of what I'm seeing right now," Ramirez said, while noting that building long-term internal capacity takes time.

Officials also discussed one-time sources and reserves. Hines said the district accepted a $2,000,000 empowerment grant for 2024'25 and set that money aside in a capital reserve rather than embedding it in daily operations; she said Sto‑Rox is not requesting a $2,000,000 empowerment injection for 2025'26, which affects short-term exit calculations. The group also noted approximately $7 million in capital-repair needs identified in the May 2024 capital-improvement plan and warned that repeated short-term "band-aid" fixes create cumulative costs.

On compliance and other obligations, Hines said the district withheld payments to cyber-charter providers that failed to return signed residency verification forms required under recent Act 47 guidance; only two of 10 providers initially complied, she said. Hines also reminded the group of a previously authorized $130,000 expenditure for solicitor work on delinquent-tax collection that staff expect to follow up on.

Next steps: Reed and district staff will present a formal budget recommendation to the board at the upcoming board meeting; Hines listed the recovery team's next meeting for April 29 at 4:00 p.m. and said the board likely will face a formal decision on millage and other budget actions before June 30.

There were no formal votes taken during the recovery-team meeting.