BELLEFONTE — Bellefonte Area School District got a first look at its preliminary 2026-27 budget this week, offering an early glimpse at potential tax increases for residents.

The draft spending plan allows for a property tax increase of up to 4.3%, though district officials said their goal is to limit any hike to between 2 and 2.5% as they refine the budget in the coming months.

Pennsylvania law requires school districts to limit tax increases to an inflation-based index, unless they receive approval through a referendum, court order or from the Pa. Department of Education. While the Bellefonte Area School District (BASD) has received such exemptions in the past, the district has typically raised taxes well below the allowable limit. For districts like BASD, which have a relatively high aid ratio — meaning they rely more heavily on state funding — an adjusted index is used instead. The adjustment increases the base index to give districts that are financially worse-off more flexibility to raise taxes.

“Historically, in the last 10 years, we have not come close to the index,” said BASD Director of Fiscal Affairs Ken Bean.

In 2026, for example, Bellefonte’s index was 4.9%, but taxes increased by only 2.5%. Over the past decade, increases have ranged from 0% to 3.5%.

“This year, we’re aiming for no more than 2.5%,” Bean said, adding that he hopes to keep any hike closer to 2%. “I think that would be a good number to allow the district to do what it needs to do to provide education, facilities, security and so forth, while also watching how much we are charging the taxpayers.”

Based on comparisons drawn to nearby Bald Eagle Area and Penns Valley school districts, Bellefonte’s tax rate appears roughly on par with its neighbors.

After taxation was addressed, Superintendent Roy Rakszawski broke down the governor’s proposed budget and what it could mean for the district financially.

Under Democratic Gov. Josh Shapiro’s proposal, which has yet to win legislative approval, nearly $900 million in additional funding for pre-K through 12th-grade public schools would boost the district’s funding by nearly half a million dollars. The plan would yield a $70,000 increase to the district’s basic education subsidy, while its special education subsidy would rise by about $54,000. Its Ready to Learn Block Grant would also increase by almost $290,000. Additional proposed cyber charter school reforms could also save the district an estimated $75,000.

Rakszawski noted that those potential gains are not reflected in the budget because they have yet to be finalized.

“That’s our way of being conservative and minimizing the risk that comes with potential changes at the state level or delays in approving the final budget,” he said.

Presently, approximately 34% of the district’s budget comes from state funding, while the majority — about 65% — is generated through local revenue sources, like real estate and earned income taxes.

Rakszawski and Bean also discussed internal drivers shaping the budget, including class sizes, staffing considerations and use of the district’s fund balance. Class size, in particular, is a major driver of salary and benefit costs.

Across its schools, BASD officials said class sizes generally remain within preferred ranges. However, administrators are considering adjustments at Pleasant Gap Elementary, where fourth grade may be reduced to one section of about 21 students, barring unexpected enrollment changes.

“It’s hard to justify two classes of 10 and 11 (students) in terms of a fiscal responsibility lens,” Rakszawski said.

The elementary’s fifth grade is also being evaluated for a potential reduction to a single section, though officials said that remains tentative, dependent on enrollment changes.

“If we get one or two move-ins, we’d have to open that to two sections, and we need to have a plan to do that if needed,” Rakszawski said. “However, if it goes the other direction, we may be able to condense that to one.”

Administrators said staffing decisions, including the possible placement of instructional aides in larger classes, will be adjusted based on final enrollment numbers.

“We’re looking at retirements, class size — kindergarten registration is ongoing… All that is being analyzed and any new positions are still being talked about as well,” Bean said.

Another financial consideration is health insurance costs, which have been increasing over the past two years.

“This is one of the areas that I think we will see a significant increase in our budget this coming year,” Bean said. “Health insurance is up everywhere — it’s not just us.”

Bean said the district is exploring options to help mitigate those rising costs.

The other major focus of discussion was the district’s fund balance.

State law prohibits districts from spending more than 8% of their reserve fund balance in a single year. For the 2026-27 budget, BASD plans to spend about 7%, or about $5 million.

After allocating at least $1 million to the committed fund balance, officials said roughly $4.275 million would remain set aside for future capital projects. Bean said he hopes to grow that amount further to help offset future major maintenance costs, like re-roofing projects.

Though many costs are rising, some revenue streams are expected to increase as well. One is tied to rising real estate assessment values.

With new hotels and other businesses coming into the district, officials said those properties will soon be added to the tax rolls.

“Right now, we normally budget 1.5% — we used to beat that somewhat. I think we’ll go beyond that significantly with these bigger commercial properties,” Bean said, noting growth is typically attributed to single-family homes.

Budget discussions will continue into the summer as BASD refines its outlook for the coming year. The board is scheduled to continue talks at its April 7 and April 21 meetings, where more detailed presentations are expected. On May 12, BASD hopes to adopt a proposed final budget and will review it again on May 26. Final budget adoption is planned for June 16, with implementation of the homestead and farmstead exclusion expected June 30. All meetings will be held at 7 p.m. in the Bellefonte Area Middle School Cafeteria.

To view Tuesday’s budget presentation, visit: tinyurl.com/preliminary-2026-2027-budget.