State College Area School District’s proposed budget includes a tax increase. What to know

Residents could be paying more in property taxes if the State College Area School District’s 2022-2023 budget plan is given final approval.

The proposed budget — which includes $177 million in revenue, $180.3 million in expenses and the use of fund balance — includes a 3.4% tax increase. The plan was unanimously approved by board members on Tuesday, but the final budget won’t be presented for approval until June 6.

Under the proposed plan, the average annual increase of household taxes will be $113. The tax amount is based on the home’s value based on the county’s 1994 appraisal, which can be found on homeowners’ tax forms.

Commercial and industrial properties will see an average increase of $846 and agricultural properties will see an average increase of $155.

The district is raising the tax rate to combat rising inflation, Randy Brown, the district’s finance and operations officer, said. The district’s expenses are projected to outpace revenue in the coming years, with a negative general fund balance in 2028 if the district does not raise revenue or cut expenses.

Brown said the district has experienced economic shortfalls due to COVID-19 and its impact on the economy.

“What really hurt us was the last few years not increasing taxes,” Brown said. “But we did that because of the economic times and trying to help the taxpayers out and not throw them another cash strain on their household incomes and business incomes.”

The district’s largest revenue source is local real estate taxes, which can only generate more revenue if more houses are built or if the rate is raised. The 3.4% increase is the maximum rate the district can raise the tax rate.

Brown said the district is looking at different ways to lower expenses, like taking on projects that will help lower operational costs in the future, like installing more efficient lights at Easterly Parkway Elementary School.

The new additions to the budget this year were mainly additional staff, including eight new teachers, an HVAC technician and contracted mental health services.

One big part of the district’s expenses is its contributions to the Pennsylvania Public School Employees’ Retirement System, as the district pays 35% of all employee wages to the organization. Although the district is partially reimbursed by the state and set aside money in previous years, retirement contributions continue to rise.

“For a number of years, since 2010, those percentages were increasing fairly significantly and it was hitting our expenditure budget fairly hard,” Brown said.

A budget hearing will be held on May 16 for the public to voice their opinions on the plan before the board votes.