State College Area School District’s proposed budget includes tax increase. Here’s why

State College area residents could see another tax increase after the State College Area school board approved its 2024-25 proposed budget on Monday night.

The proposed budget includes a 2.65% real estate tax increase. If the board approves the final budget, this will be the third year in a row of rising real estate taxes. The board voted to keep millage rates level for 2020-21 and 2021-22.

The tax increase will help pay for new staff positions, including an additional full-time diversity, equity, inclusion and belonging position, a part-time high school math position, and a Multi-Tiered Support System teacher. Other recurring costs in the budget include $45,000 for AP test expenses, a new safety and security budget and higher substitute teacher rates.

The proposed budget includes $197,934,645 in revenue and $202,570,869 in expenses. Despite the budget not being balanced, Randy Brown, the district’s finance and operations officer, said half of the deficit will be covered by the debt service fund balance.

“That’s why you have a fund balance sometimes,” Brown said. “Some of the school districts I follow repeatedly have an unbalanced budget when it is approved. This is not a common thing for us but it is something we are going to continue and try to correct between now and when we present the final budget.”

Board member Jackie Huff said the district’s deficit could also be lessened by changes in state revenue once the state sets its 2024-2025 budget later in the year. The district relies mainly on local sources of revenue, with $38,587,292 or 19% of the district’s budget projected to come from the state for 2024-2025.

“While we don’t know what the budget is in the state of Pennsylvania yet, there’s no way our allotment from the state will go down, and so when we project the budget we keep it flat,” Huff said. “But there’s a lot of hope that our numbers will go up slightly and there will be some other cost-saving measures taken at the state level.”

The district raised taxes last year by 4.1%, the maximum increase allowed under the Act 1 index without seeking an exception from the Pennsylvania Department of Education. The proposed increase is half of the district’s Act 1 index limit of 5.3% for 2024-2025.

The approval of the proposed budget is just one of many steps, with a budget hearing on May 20. The board will vote to adopt the final budget during its June 3 meeting before submitting it to the Pennsylvania Department of Education before the June 15 deadline.

This story was originally published April 17, 2024 at 12:39 PM.