North Penn CFO Steve Skrocki, inset, shows a chart of the state-set Act 1 index of tax increases allowed without a voter referendum, during the school board finance committee meeting on April 23, 2024. (Screenshot of NPTV video)
4 percent tax increase level set by state
A big piece of the 2025-26 budget for the North Penn School District is coming into focus.
School board members have voted to stay within the Act 1 index set by the Pennsylvania Department of Education for the upcoming year.
“The ’25-26 Act 1 index has been certified by PDE at 4.0 percent. At 4.0 percent, that would generate approximately $8.8 million in additional real estate tax (revenues) for the North Penn School District,” district CFO Steve Skrocki said.
Each year the school board and staff hold public budget talks throughout the spring ahead of a formal vote in June to adopt a budget effective July 1; the most recent budget approved in June 2024 totaled $322 million, with a 4.49 percent tax increase, equaling a $197 hike for the average taxpayer.
That tax increase came in below a record-high Act 1 index, the state-set percentage at which taxes can be raised each year without a voter referendum, which had been set at 5.3 percent, the largest since the act became law in 2006. Each percentage in tax increase will generate roughly $2.1 million in new revenue for the district, at a cost of roughly $44 to the average residential property owner, based on an average assessed home value of $150,000.
In the 2024-25 budget, staff said during discussions, roughly $6.8 million of the increased expenses compared to the prior year were for contracted staff salary and benefits, with $460,000 in added costs for charter schools, just under $600,000 in contracted transportation costs, and a $2 million transfer to capital reserves for planned renovations to North Penn High School.
North Penn CFO Steve Skrocki, inset, shows possible tax increases for 2024-25 and the resulting revenue and projected deficit, during the school board finance committee meeting on April 23, 2024. (Screenshot of NPTV video)Prior to the 4.49 percent increase for 2024-25, previous tax increase levels approved by the board have been 4.1 percent for 2023-24, 3.4 percent for 2022-23, 2.85 percent for 2021-22, 2.6 percent for 2020-21, and a hike of 2.3 percent in 2019-20; the district last exceeded the index in 2018-19, when the board approved a budget with a 3.4 percent increase, above the Act 1 index of 2.4 percent that year, by using a 1 percent exception for special education funding.
During the school board finance committee meeting on Oct. 8, Skrocki gave the board the latest figure, saying the projected 4.0 percent increase looks likely to create enough new revenue to approach a balanced budget.
“We feel that will be sufficient to get to a nearly balanced budget for the ’25-26 year, without consideration for the special education exception application,” he said.
Skrocki added that the state’s Independent Fiscal Office has also recently updated their projections for future years, “and we did expect a decline” after the 2025-26 year that now looks likely.
“And that’s exactly what’s being projected: in 26-27, 3.7 percent; the following year 3.4 percent, then 3.2 percent, and in ’29-30 3.2 percent. So they go out another four years,” he said.
During that Oct. 8 meeting, the finance committee voted ahead a resolution declaring the board will stay within the index for 2025-26, and the full board unanimously approved that resolution when they met on Oct. 17. In his report to the board during the latter meeting, Skrocki added that the district’s annual audit for 2023-24 is now nearly complete, and a presentation on that audit, and possible transfers of surplus and unspent funds for that year, will be discussed at the finance committee’s Nov. 12 meeting.
One other budget-related note from the CFO: after reporting on record-high interest earnings for the fiscal year just ended, which Skrocki said in September yielded over $5 million in unexpected revenue, a recent rate cut by the Federal Reserve has gone in the opposite direction.
"The party is starting to be over with interest income, because the Fed did cut by half a percent," Skrocki said. "We'll start to see our investment income go down, but we did plan for that in the budget."
That drop in revenue could be offset elsewhere in the budget, he said, including from transfer taxes on real estate transactions.
"We are seeing an uptick in real estate activity, in terms of transfer tax. Month over month, for the past couple of months, it's picking up again," he said.
North Penn's school board next meets at 7 p.m. on Nov. 12 and the board finance committee next meets at 6 p.m. that night; for more information visit www.NPenn.org.
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