The Northeastern School District enters this year's budget discussions facing a deficit between $1.3 million and $2.1 million, school board members were told this week.
And they'll soon be asked to make their first key decisions: whether to limit the possible tax increase to the state imposed cap of 2.3 percent or explore the option of raising taxes by as much as 3.9 percent.
"These are not easy decisions for anyone to make," Superintendent Jody Nace said. "The board will be balancing the needs of our students with what they believe the community will be able to bear."
When the board voted to increase teacher's salaries between 2 percent and 3 percent per year for the next three years in November, the district estimated the deficit at slightly more than $1 million dollars.
A number of factors could cause that figure to climb, including the tax status of Tower 3 at ES3, a large warehouse facility off I-83 in Manchester Township.
If Tower 3 is placed into the a tax abatement program known as LERTA, the district could lose an estimated $455,000 in revenue, said Brian Geller, the district's director of operations.
The district also is hoping to replenish its capital fund and upgrade its phone system as part of the budget. The latter would cost $75,000 and is the only new special request being made as part of the budget process.
Tax figures: Raising taxes by 2.3 percent would result in a $55 tax hike for the owner of a home assessed at $100,000. It would also raise $715,000 that could be used to cut into that deficit.
But the district could apply for an exception from the state to raise taxes higher than 2.3 percent because of an increase in payments to its pension fund. Geller said that would allow the district to raise taxes by 0.94 mills.
A tax increase of that amount would mean an extra $94 in taxes on a $100,000 home, or a tax hike of 3.9 percent.
To put things into perspective, Geller said the salaries of 13 to 22 average-salaried employees equals the cost of the deficit range without raising taxes.
Last year, the district voted to lay off nine teachers. Although district teachers got a raise this year, they are now responsible for higher co-pays and increased deductibles with health insurance coverage because of the new teacher contract signed in November.
Even with a tax hike this year, the district will likely be making further cuts.
What's next? The board needs to decide whether to stay within the tax cap by the end of the month. That vote will likely come at the board's next meeting at 7 p.m. Monday, Jan. 21.
"I think the missing player on the field here is the general public," said board Vice President Linda Morningstar. "It seems that people aren't happy with the decisions that we make, but I think that if they understood the depth of the concern that we have, they would be better able to understand and support our decisions, or maybe give us feedback or other alternatives that they may come up with."
Board members expressed the public to attend upcoming meetings.
Northeastern has raised taxes to the state cap each of the past two years - by 1.9 percent last year and 2.3 percent this school year. It's tax rate stands at 24.26 mills, or $2,427 for a $100,000 home.