Consultant: East Stroudsburg faces structural budget gap; fund balance could be exhausted in 1–2 years

Jim Mirabelli of School Business Consultants told the East Stroudsburg Area School District board on April 20 that the district’s fiscal picture improved on paper for 2024–25 but remains structurally unsound.

Mirabelli said the district closed fiscal 2024–25 with a $10.3 million deficit — better than the $17.4 million the board had budgeted — largely because of one‑time revenues and timing factors, including ESSER spending and bus financing. He warned that those gains do not resolve an underlying imbalance between recurring revenues and growing recurring costs such as salaries, benefits and special‑education services.

“At a high level, those results came in a little better than expected,” Mirabelli said. “But these improvements do not mean the underlying financial conditions and challenges have been resolved.” He said salary and benefit totals increased by about $19 million in 2025 compared with 2024 after a new collective‑bargaining agreement, and that staffing grew 11.2% over several years while enrollment fell roughly 4.9%.

Mirabelli outlined what he called the main drivers: one‑time revenues and expenditures in 2024–25 (ESSER funds used mainly for HVAC, a $5.7 million bus purchase funded with a note, and a backlog of plan‑con reimbursements), a favorable reduction in cyber‑charter tuition exposure this year, and several expense variances (notably $1.2M above budget in special education costs in 24‑25).

For 2025–26, Mirabelli presented a rolling forecast that assumes some favorable revenue variances (e.g., an estimated $1.5M more in current real‑estate taxes and improved interest income) and $8.8M in budgetary savings driven largely by debt restructuring and tighter expense management. Even with those adjustments, his projection reduced a previously cited $26.4M projected deficit down to roughly $14.6–$14.7M.

“If we realize the projected loss,” he said, “we will be down to a general fund balance of about $26.2 million at the end of this fiscal year.” Mirabelli added: “If you do the math… it doesn’t take much to say you’ll be out of money in your general fund within 1 to 2 years at this pace.”

The presentation included details Mirabelli said the board and administration will continue to refine: a projected $720,000 in delinquent tax collections that is hard to pin down until July, approximately $160,000 extra in state special‑education funding, and an expected drop of about $420,000 in rental and sinking‑fund reimbursements because of processing delays.

Board members asked clarifying questions after the presentation about what items are recognized in the forecast and about the coming reassessment cycle and homestead/farmstead allocations. Mirabelli said the administration and his team will continue to rerun projections as new monthly close data are available and will return to the board if projection changes are material.

Next steps cited by the presenter included ongoing forecasting updates, preparations for the 2026–27 budget once county assessment and homestead data are available, and continued discussions about structural options to close the recurring gap.

Ending and next steps: The board did not vote on policy changes during the presentation; Mirabelli said staff will revisit forecasts at each close and will provide updates to the board when material changes occur.