Public school districts in Pennsylvania are required to adopt a final budget no later than June 30 for each succeeding fiscal year.
Act 1 of 2006 establishes the process which school districts must follow in adopting their budgets. Act 1, as amended by Act 25 of 2011, establishes the maximum percentage that a school district may increase its real estate tax rate without voter referendum or exceptions that must be approved by the Pennsylvania Department of Education. This index is calculated based upon the Pennsylvania statewide average weekly wage and the Federal employment cost index for elementary/secondary schools, which is then adjusted for each district’s market value/personal income aid ratio.
Each fiscal year a school district must choose to either adopt a preliminary general fund budget or adopt a resolution stating that taxes will not be raised above the school district’s adjusted index. A preliminary budget must be adopted no later than 90 days prior to the primary election, and the resolution not to exceed the index must be adopted no later than 110 days prior to the primary election.
The 2020-2021 General Fund Proposed Final Budget
The proposed final budget for the 2020-2021 fiscal year projects a 1.0 percent increase in the real estate tax rate over the existing rate for the 2019-2020 fiscal year. The Act 1 Index limit for Cornwall-Lebanon for the 2020-2021 fiscal year is 3.2 percent. The proposed increase in the tax rate amounts to a $25 increase in the real estate tax bill for the median homeowner having an assessed property value of $160,500.
Property tax relief in the amount of approximately $121 is expected to be provided to approved homestead and farmstead property owners on their July 1, 2020 property tax bills. This relief will appear directly on individual tax bills as a reduction in the assessed value of each approved homestead and farmstead property.
Total expenditures are projected to be $81.6 million in the 2020-2021 proposed final budget. The increase in expenditures represents a $1.0 million or 1.24 percent increase from the 2019-2020 budget.
Total revenues in the 2020-2021 proposed final budget are projected to decrease by $0.76 million or 1.0 percent from the 2019-2020 budget. Revenue from local sources (prior to a tax increase) is estimated to decrease by $0.7 million or 1.20 percent, primarily due to anticipated reductions in earned income, realty transfers, and interest earned. Revenue from state sources is projected to decrease by $0.3 million or 1.24 percent.
The District anticipates using Assigned Fund Balance of $1.2 million and Unassigned Fund Balance of $0.63 million to balance the 2020-2021 budget.
Governor Wolf’s order to close all Pennsylvania schools for the remainder of the 2019-2020 school year to mitigate the spread of COVID-19 has created uncertainty about what operations and activities for the 2020-2021 fiscal year will look like. Additionally, the closure of nonessential businesses and the substantial increases in unemployment claims over the past several weeks raises significant concerns about local and state revenues, many of which are driven by taxpayers earning and spending money. With revenue sources projected to shrink for the 2020-2021 fiscal year, a reduction in expenditures was needed. The District will be reducing professional positions through attrition and leaving vacant or temporarily outsourcing open support staff positions. Furthermore, supply budgets and expenditures have been reduced, activity runs will be modified, and long-term capital projects are being delayed.