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BELLEFONTE -- Confronting a $5.37 million deficit, the Bellefonte Area School District (BASD) is proposing a 2.5% tax increase to balance its 2026-27 budget.
Administrators presented the proposed final budget this week, outlining a plan that relies heavily on the district's fund balance to offset rising costs.
Superintendent Roy Rakszawski and Director of Fiscal Affairs Ken Bean reported the district's expenditures will reach $70.2 million in the upcoming school year, while revenue is expected to cap out at $64.9 million.
Their plan to address the deficit would spend down more than half of the district's fund balance, leaving reserves at 7% of the budget ($4.9 million), the minimum mandated by board policy.
A proposed 2.5% real estate tax increase would bring the millage rate to 57.0998 and help offset the remaining shortfall. For the average home, valued at $109,728, that would mean paying $3,132.71 in real estate taxes -- $76.35 more than last year.
The proposed increase remains well within the state index limit, coming in $556,000 below the maximum permitted 4.3%.
Bean explained the district has limited flexibility to negate this as most of its financial pressures come from requisite spending.
"Ninety percent of the budget is kind of already set," he said, pointing to salaries and benefits, tuition, transportation contracts, education services and debt service. "Sure, we can cut positions, you could cut some transportation, but that's not really feasible."
Here is where is the money going:
(Figures remain subject to change as the budget is finalized.)
SALARIES & BENEFITS
Salaries and benefits remain the largest expense, accounting for 62.1% ($43.6 million) of total spending.
"As we've talked about often, salaries and benefits make up the overwhelming percentage of the overall budget," Bean said.
Within that category, salaries account for 55% and retirement benefits another 20%. That includes one new hire, a special education paraeducator brought on to support a student with specialized disability needs.
Health insurance, another major component of those costs, alone has risen 11% in the past year. Bean has budgeted $700,000 more this year, for a total of $7 million, or about 16% of salaries and benefits, but said he is still awaiting final numbers from Capital Blue Cross to confirm whether the increase is adequate.
"The last three or four years we've been seeing a very steady climb in those numbers," he said. "This is no different from anywhere else."
Bean attributed the increases to a combination of factors, including more members on the plan and rising prescription drug and procedure costs. He said the district has been fortunate that its increases have not been as substantial as those seen in other districts.
CHARTER & TECHNICAL SCHOOL TUTITION
A combined 9% of BASD's 2026-27 expenditures will go to charter schools and CPI, the regional vocational-technical school.
About 5% ($3.6 million) of that is directed to charters.
With recent changes to the state's charter school funding formula, BASD now pays different tuition rates depending on the type of education provided. While enrollment is slightly down this year, district officials said overall numbers have remained consistent.
In the 2026-2027 school year, BASD estimates having 74 students enroll in cyber and 94 in brick-and-mortar charter schools. In each, the district anticipates 24 will need special education.
The remaining 4% ($2.7 million) supports vocational programs at CPI.
"We'll see a significant increase in CPI tuition cost for next year," said Rakszawski, who noted that, in addition to routine cost increases, rising expenses from its health insurance consortium and the addition of new programs are driving the change.
The proposed masonry and electrical programs, however, could be delayed until the following academic year, Rakszawski said.
"If they are not added next year, these costs could very well be reduced from what we have planned now," he said.
DEBT SERVICE
Yet another major expense is the district's debt service, which alone accounts for 7% ($4.8 million) of the budget.
Up until 2024, ahead of construction of its new elementary school, BASD was primarily paying down principal on its debt.
"Now that we've refunded or paid off and borrowed a new debt, much more of it is interest payments going forward," said Bean.
He explained the amount is relatively fixed at about $4.7 million moving forward, which is several hundred thousand dollars higher than it has been in the last decade.
TRANSPORTATION
Transportation expenses, which are gradually shifting with the consolidation of the district's elementary schools, have risen slowly but steadily in recent years.
Accounting for 3% ($2.2 million) of the budget, transportation contracts have been a recurring challenge for the district.
Bean said BASD continues to face a shortage of drivers, having only enough staff to cover regular routes but not enough substitutes to fill in when needed.
The consolidation of Benner and Bellefonte elementary into the new Bellefonte Elementary School has allowed the district to eliminate one bus run, though that change has not yet been finalized.
"When one or two are out, we don't have enough subs," Bean said. "We've had to combine buses."
He said the district is working with Fullington, its transportation contractor, to explore ways to recruit drivers.
ATHLETIC FUND
The district's athletic budget is also projected to run a shortfall in the coming year, with $1,245,000 in anticipated expenditures but only $1,230,000 in revenue. While spending is up about $65,000, the district will contribute an additional $100,000 from the general fund, bringing its total contribution to $1.1 million.
The remaining deficit will be covered with $15,000 from the athletic fund, leaving about $457,000 in reserves. The athletic budget accounts for 2% ($1.2 million) of the district's overall spending.
Much of the increase in expenses is tied to three projects: continued upgrades to the district's weight room, the purchase of an HUDL streaming system to allow free public broadcasts of games and the replacement of 15 helmets, which will cost an estimated $10,000 to $15,000.
FOOD SERVICE
BASD's food service budget, meanwhile, is projected to decline across the board. The district anticipates $1.9 million in expenditures, a decrease of $100,000, and about $1.7 million in revenue, roughly $125,000 less.
The deficit will be covered with $225,000 in fund balance, leaving about $337,000 in reserves. If the shortfall persists another year, Bean warned the district may have to contribute money from the general fund.
The gap is prompting an increase in ticket prices, though the amount has not yet been determined. Breakfast, however, will be free for all students.
Bean said increased uncertainty surrounding federal subsidies, which have declined since the COVID-19 pandemic, is contributing to the pressure.
"That has been hitting our bottom line significantly," he said.
OTHER EXPENSES
The remaining portion of the budget is allocated to educational services (8%), the physical plant (4%), books and supplies (3%) and capital projects (2%).
Those categories include a range of expenses, among them $100,000 for new band uniforms and $150,000 for two handicap-accessible vans, which the district currently does not have but will require in the coming school year.
As of July 1, the district's committed fund balance will also include $5 million for future capital projects, including $1.8 million from the 2026-27 budget, as well as $500,000 set aside for curriculum and instruction.
STILL TO BE DETERMINED
Several key variables remain unsettled as the district moves toward finalizing its budget.
Assessed value growth currently sits at 2.6%, though that figure could change if additional commercial properties are added to the tax rolls in the coming month.
The district's professional staff contract, which expires in June 2026, also has yet to be renegotiated. Health insurance rates also remain unfinalized, and BASD's allocation of state gaming funds has not been announced.
In addition, no new state education funding has been included in the budget at this point, as the state budget itself has yet to be finalized.
WHAT'S NEXT
Budget discussions will continue into the summer as BASD refines its outlook for the coming year. 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.