BELLEFONTE — The Bellefonte Area School Board unanimously approved a final budget Tuesday that raises property taxes by 2.5% and calls for the use of $5.35 million in fund balance reserves to cover rising costs.

Ken Bean, BASD’s director of fiscal affairs, and Superintendent Roy Rakszawski reported the district’s expenditures will reach $70.45 million in the upcoming school year, while revenue is expected to cap out at $65.1 million.

The 2026-27 budget includes expenditures that exceed projected revenues by $5.35 million, but district officials said the gap would be covered through a planned drawdown of existing fund balance reserves, resulting in a balanced budget.

“We are not running a deficit balance,” said Bean. “That is planned usage of any fund balance in excess of 7% of expenditures.”

The use of reserves will halve the district’s fund balance, reducing it to $4.93 million — or 7% of expenditures, the minimum reserve level required under board policy.

A 2.5% real estate tax increase will bring the local millage rate to 57.1003 and generate an estimated $816,800 in additional revenue for the district. For the average home, valued at $110,206, that would mean paying $3,146.40 in real estate taxes — $80.45 more than last year before homestead and farmstead exclusions.

The increase remains well within the state index limit, coming in $556,000 below the maximum permitted 4.3%.

Helping offset some of the district’s financial pressures is a 3.28% increase in assessed property values, which will generate additional property tax revenue.

“This is a very high percentage for us, primarily due to the Amazon warehouse and one of the hotels on the Benner Pike coming on,” Bean said.

Additionally, earned income tax revenue is expected to increase by about $500,000.

Even with those revenue increases, expenditures are projected to outpace revenues. Bean said the district has limited flexibility to reduce costs, as most financial obligations are driven by required spending.

“Ninety percent of the budget is kind of already set,” he said at a budget hearing in April, referring specifically to salaries and benefits, tuition, transportation contracts, educational services and debt service. “Sure, we can cut positions, you could cut some transportation, but that’s not really feasible.”

Salaries and benefits remain the district’s largest expense, accounting for 62% ($43.7 million) of total spending.

Health insurance, one of the district’s fastest-growing expenditures, required an increased allocation of $900,000. Bean previously attributed the increases to a combination of factors, including more plan participants and rising prescription drug and medical procedure costs.

Likewise, more than $185,000 has been budgeted to account for rising utility costs.

While charter school reforms provided some relief, the district will still be responsible for $3.6 million in charter tuition, in addition to $2.4 million in tuition payments to CPI, BASD’s contracted vocational school.

The district is also responsible for $4.7 million in debt service.

Despite financial constraints, Bellefonte’s 2026-27 budget includes several key spending priorities.

About $2 million is set aside for future capital projects, including roof replacements at Bellefonte Area High School and the Marion-Walker and Pleasant Gap elementary schools, as well as repairs to district parking lots and upgrades to heating, ventilation and air conditioning systems at the middle school.

Additional funds are budgeted for a new math curriculum ($840,000), new marching band uniforms ($100,000) and two handicap-accessible vans ($150,000), as well as the hiring of an additional special education paraprofessional.

Because the state budget has not yet passed the legislature, state education subsidies are assumed to remain flat. Any increase in subsidies could reduce the district’s financial burden next year, while reductions could increase it once final state funding levels are set.

Beyond the district’s general budget, the board also reviewed and approved its other funds for the upcoming year.

The BASD food service budget remains self-sufficient, though meal prices were increased slightly to maintain solvency. Elementary and secondary lunch prices increased by $0.05 to $2.75 and $3.05, respectively. Adult lunch prices remain $4.20, while breakfast for all students remains free.

The food service budget totals $1.9 million.

The athletic fund budget projects $1.245 million in expenditures against $1.23 million in revenue, leaving a roughly $15,000 shortfall. The district will cover that gap with a $1.1 million transfer from the general fund, along with a $15,000 draw on athletic fund reserves, while maintaining an ending reserve balance of about $457,000.

Much of the increase in athletic spending is tied to facility and equipment upgrades, including continued improvements to the weight room, the purchase of an HUDL streaming system for game broadcasts and replacement of approximately 15 football helmets.

Implementation of the homestead and farmstead exclusion is expected at the board’s June 30 meeting. Meetings will be held at 7 p.m. in the Bellefonte Area Middle School cafeteria.