The Canon-McMillan School Board last week unanimously approved a 2020-21 preliminary budget of $96,089,496, and residents likely will see a tax increase.
In all, the district has $89,769,973 in revenues and $93,264,978 in expenditures, with a majority of expenditures coming from salaries, health care benefits, and debt service.
Currently, the budget is in a deficit of $3.49 million, and Canon-McMillan Business Manager Joni Mansmann predicts anticipated projections will get worse as the district prepares its final budget.
The school district plans to use a portion of its fund balance to help reduce the deficit.
The budget is especially challenging to determine because the coronavirus pandemic is making it difficult to estimate income sources such as earned income and real estate property taxes, said Mansmann.
COVID-19’s impact on unemployment will probably negatively impact local revenue, and business closures likely will adversely affect state revenue.
More than 70% of the budget is comprised of local revenues, and the district is bracing for a potentially negative impact on state revenues.
Last week, the school district received a notice from the Pennsylvania Department of Education that indicated the 2020-21 state property tax reduction allocations will be recertified due to the pandemic’s impact on state gaming revenue.
If the reduction caused by recertification results in a revenue decrease of 50%, it would result in about $470,000 of additional lost revenue for the district.
The district likely will recommend a tax increase in the final budget, as it indicated at the district’s Act 34 hearing for the new middle school project, and is hopeful that refinancing of bonds before June 25 will offset some of the revenue losses.
Administrators have begun working on a budget reduction list that will be considered if revenues fall short.
Budget discussions will continue next month, and the board is expected to adopt a final budget on June 25.