Board could vote in May on tax increase
With weeks until final decisions must be made, North Penn School District’s budget picture for 2026-27 continues to come into focus.
School board members discussed the latest version of the budget this week, with a tax increase all but certain when finalized in June.
“We’ll see proposed final next month, but this is just an overview, to give you a status of where we are,” said Superintendent Todd Bauer.
Last fall the outgoing board members voted to stay within the state-set Act 1 level of a permissible tax increase without seeking voter approval. In February district CFO Tara Houser outlined a new budget presentation timeline and several tax increase scenarios.
As of the end of March, Houser told the board in their April 7 finance committee meeting, several figures have continued to be updated and refined, including budget variances including lower expense and higher revenues that have narrowed a wide gap for the 2026 fiscal year ending in June.
“Originally, we were budgeted to come out at about a $9 million deficit. It’s looking like that’s going to be about a $1.7 million deficit, which is $8 million to the good,” Houser said.
In the 2025-26 budget, the district included a roughly $15 million transfer to capital reserves to fund several smaller capital projects across the district, and Houser said the draft 2026-27 budget will likely include a similar transfer.
“Before transfers to capital, our preliminary budget is in positive territory, I think we’ll probably break even, before transfers to capital for next year, which was very similar to the story of last year’s budget,” she said.
“Before your $15 million transfer to capital, you were sitting at an $8 million surplus. After that transfer, that’s where the $9 million budgeted deficit came from. We’re kind of in the same boat again this year.”
For 2025-26, the district budgeted to draw in just over $339 million in revenues, of which just over $263 million could come from local sources, including $251 million from local real estate taxes, roughly $6 million in interest income on invested reserves, about $2.7 million in grants, and $2 million in delinquent tax payments, plus an additional $71 million in state subsidies and $3.4 million from federal sources.
Updated projections have bumped those figures up to roughly $253 million from local taxes, just under $74 million from the state, about $7.9 million in interest earnings, and roughly $3.8 million in federal sources, adding up to about $344 million total, but with drops possible next year.
“Looking at next year, the state level numbers are numbers that have been posted by the state; the state has posted their proposed basic ed funding, and special ed funding,” subject to state budget negotiations, the CFO said.
“If you’ll notice, year over year, we’re pretty flat. So there is not much gain in our basic ed subsidy, in the state budget, nor our special ed subsidy. Our special ed costs are definitely going up way more than our special ed subsidy,” she said.
Early projections for 2026-27 would put local revenues at about $275 million total, of which just under $262 million would come from local real estate taxes, based on the board approving a tax increase in June at the 3.5 percent Act 1 index level.
“This reflects a 3.5 percent increase, which is the index. We are not asking for exceptions, for this year,” she said.
The 2026-27 estimates also include another $7 million in interest income that may or may not materialize depending on changes to interest rates, and estimates of $74 million in state funding and $3.2 million in federal funding that are also still uncertain.
“Federal revenue is coming down a little bit. Most of that is related to changes in the title structure, year over year,” Hauser said, and how federal funds are issued to states through grants that may or may not be rescinded or defunded.
“I built in an increase in interest income over budget (for 2025-26), but it’s not as high as the projected (earnings) for this year. We had some months that we were up over 5 percent, and I do not anticipate that happening for next year,” she said.
Also up in the air are the results of roughly 60 property assessment appeals, some filed by the district and some by taxpayers, with refunds or increased revenues subject to change based on whether those go to court or are settled, the CFO added, including “a couple of very significant landholders.”
“I tried to go a little bit conservative, to make sure that we don’t over-budget revenue in these next couple of months before some of those cases come back in. So we’re working through that with multiple parcels, and every month brings better information,” she said.
Expenses also grow
On the outbound side of the budget, expenses are also slated to grow in the upcoming year, with a budgeted $261.6 million in total costs projected to finish the year at just under $258 million, then grow to $272 million for 2026-27. Of the latter number, the district projects roughly $166 million for total salaries and wages, an additional $106 million in total benefits including medical and prescription costs.
“All of that, right now, is based on contractual increases on current staffing levels only. I do not have any growth in there yet,” Houser said.
“Growth of positions will be determined by continued conversations at the administrative level about need, across the district, as well as attrition,” which could include not filling positions of staff who retire, or replacing retirees with younger staff at lower salaries.
Other non-personnel costs for the upcoming budget year include roughly $20 million in outsourced professional services: “Those are things like outsourced doctors, lawyers, those kinds of professional services,” another $21 million in ‘other purchased services’ including education placements for students outside the district, and just under $15 million for supplies, up from about $12 million this year, and “most of that (increase) is inflationary.”
“Altogether, we’re looking at about a $20 million increase in total expenditures, year over year. Most of that is in your ‘salaries’ line,” she said.
Capital transfers too
As for the capital projects, the 2025-26 budget included a $15.8 million transfer from the general fund to capital projects, and the draft 2026-27 budget starts with a $15 million transfer for the same purpose, the CFO said.
“Before capital (transfers), we’re still looking at a positive budget, but anything under $2 million on a $300 million budget is really break-even,” she said.
The $15 million capital transfer is also separate from a planned $60 million bond borrowing currently in progress to go toward the roughly $260 million renovations for North Penn High School, and that reserve transfer “shouldn’t have to touch our unassigned fund balance” of funds already in reserves.
Info that could still change between now and May could include the assessment appeals, energy costs, staffing level increases, and costs for technology upgrades such as new laptop computers that could be purchased using surplus funds from 2025-26 instead of budgeted funds for 2026-27.
“We’ve collated everything, and now we really start to analyze and dig into variances from last year to this year, and to projections, and is this the right budget for you,” she said.
North Penn’s school board next meets at 7 p.m. on April 23 and the finance committee next meets at 6 p.m. on May 5, both at the district Educational Services Center, 401 E. Hancock Street. for more information visit www.NPenn.org.
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