2023-24 Budget Development
As the Exeter Township School District crafts the 2023-24 budget, information about upcoming public workshops and budget development will be posted on our website. The administration and Board of Directors welcomes public input from parents, families, taxpayers and Exeter community members during this process; please consider attending a workshop to participate.
All workshops are scheduled for 6PM in the school's library.
- October 26 - Junior High
Topic: Junior High Capital Projects & Act 1 Index
- November 30 - Senior High
Topic: Senior High Capital Projects & Revenue
- December 21 - Lorane
Topic: Lorane Capital Projects & Expenditures
- January 25 - Reiffton
Topic: Reiffton Capital Projects & Future Projections
- February 22 - Jacksonwald
Topic: Jacksonwald Capital Projects & Governor’s Budget Proposal
- March 22 - Owatin Creek
Topic: Owatin Creek Capital Projects & Budget Challenges/Changes
- April 26- Transportation Center
Workshop Information & Presentations:
On October 26th, the district hosted the first of several public budget workshops, which aim to create a forum for community participation as the 2023-24 budget is crafted. Each workshop, which will be held at a different building in the district each month, will focus on a specific presentation of a topic related to the budget. Further, each workshop will open with a tour of the building to point out maintenance priorities and discuss capital project needs for that building. Yesterday’s meeting was held at the Junior High and included a presentation about the Act 1 Index and how it influences the shaping of the budget.
Junior High Capital Projects:
ETSD Director of Operations Stephen Biggerstaff opened the meeting with a presentation of identified capital projects and their status, highlighting that the auditorium “needs serious work.” He indicated that repairs to the seats were no longer supported by the manufacturer, so if one breaks, it needs to be removed. In addition, he said that the flooring needs to be replaced, the stage needs work and the curtains need to be replaced. Another priority will be upgrading bathrooms as seals on toilets and the piping to them make maintenance difficult due to the design of the building. Due to humidity, which is being managed mostly through stand-alone dehumidifiers, ceiling tiles have a tendency to sag, which can lead to costly repairs. He also mentioned that the building’s stair lifts for wheelchair-bound or disabled people are aging and will need to be replaced soon, as well as general equipment upgrades for some specialty classrooms.
Speaking to the assembled board members, Superintendent Dr. Christy Haller said, “We wanted to get you up to speed on capital projects and prioritization that is realistic and affordable. There has been a lot of deferred maintenance since the capital projects improvement plan was developed (in 2017). Now, the price tag on some of these projects is substantially higher… This building has significant needs,” she said.
Act 1 Index Review
Business Administrator Brian Feick next presented the budget topic of the workshop: the Act 1 Index.
What is the Act 1 Index?
- The Act 1 Index is used to determine the maximum tax increases for each tax the school district levies (without Pennsylvania Department of Education exception or voter approval). It is determined by a formula that the state calculates by averaging the percent increases in the Pennsylvania Statewide Average Weekly Wage (SAWW) and the Federal Employment Cost Index (ECI) for elementary/secondary schools. Dr. Haller said that the purpose of the Act 1 Index is to “Have control on school budgets,” explaining that the index forces districts to budget without raising taxes in an irresponsible manner.
Has the 2023-24 index been announced?
- Mr. Feick announced that the index for 2023-24 is 4.1%. However, he said that each school district in Pennsylvania then gets an adjustment, which may leave the index at 4.1% or may increase the index amount. This percentage is based off of a state-set formula that uses market value, personal income and aid ratios. When calculated, Exeter’s adjusted index is 5.3%. This means that the school board could raise property taxes up to 5.3% for the 2023-24 budget without seeking a voter referendum during the May 2023 primary.
Besides a voter referendum, is there any other way that Exeter can increase taxes above the index?
- Yes. If Exeter qualified for an “exception,” it could apply to the Pennsylvania Department of Education for a higher index. Exceptions include:
- School construction
- Exceptional special education costs
- Retirement contributions
Mr. Feick announced during last night’s meeting that Exeter does not qualify for any exceptions and does not want to seek a voter referendum; therefore, he will begin creating a 2023-24 budget that falls within the 5.3% adjusted index. He will ask the Board to consider passing an “Accelerated Budget Opt-Out” during November’s voting meeting, which will allow him to follow a normal budget timeline (available HERE).
On November 30th, the district hosted the second of several public budget workshops, which aim to create a forum for community participation as the 2023-24 budget is crafted. Each workshop, which will be held at a different building in the district each month, will focus on a specific presentation of a topic related to the budget. Further, each workshop will include a tour of the building to point out maintenance priorities and discuss capital project needs for that building. November 30th’s meeting was held at the Senior High and included a presentation about revenue and how it influences the shaping of the budget.
Superintendent Dr. Christy Haller along with Exeter’s Business Administrator Mr. Brian Feick led the presentation and discussion about the challenges of shaping a budget when:
- Grant money is required to be used for very specific expenses
- Suburban districts like Exeter do not receive significant support from the federal and state government to cover basic education expenses or the mandates that they require
- The district continues to face increasing costs due to inflation; special education costs; and the safety, repair and upkeep of aging district buildings
- State legislation has not changed that requires the district to pay cyber charter schools the same amount of money to educate students as those attending brick-and-mortar schools in the district
The slide presentation from the workshop can be found HERE, and a discussion of each slide is below:
What is the goal of the district when creating a budget?
Dr. Haller opened the presentation with a simple equation: Expenditures = Revenue. “This is our goal,” she said, mentioning that previous administrations have dipped into the district’s fund balance in order to create a balanced budget, which is a practice she’d like to avoid. “The bottom line is you can’t spend more money than what you have,” she said.
What a fund balance?
Explaining that a fund balance is like a savings account, Dr. Haller explained that the district is required by the state to keep a fund balance that does not exceed more than 8% of its total expenditures. For Exeter, last year’s fund balance was 6.39% or about $5.2 million. “But this will only cover about 23 days of operating expenses,” she cautioned. When creating the budget, she said it’s challenging deciding how much money to keep in the fund balance because Pennsylvania school districts are required by law to submit a budget by June 30th, but she said that can prove to be a bit of a guessing game. “The state does not always submit their own budgets on that date, so a district is sometimes submitting its budget not exactly knowing how much money they’re going to get from the state or when those funds are going to come… There are instances where districts didn’t know how they were going to make payroll.”
Does a fund balance affect a district’s ability to borrow?
Yes. Dr. Haller explained that a district’s history with its fund balance affects its Standard & Poor’s (commonly referred to as the S&P) rating, which determines its creditworthiness. “We are one of the few in the county that have an AA rating,” she said, mentioning that the district’s rating would allow it to receive a better interest rate should it decide to borrow or refinance debt in order to complete capital projects or improvements. Business Manager Mr. Brian Feick mentioned that banks often like to see districts with some debt (when lending) “since it shows you’re taking care of your properties.”
Where does the district’s revenue come from?
Dr. Haller presented a chart that showed the average local, state and federal revenue sources for all PA school districts over a 10 year period, as well as Exeter’s own revenue sources. She explained that both the state and federal government offer more money for districts in economically-disadvantaged areas, but in Exeter, we must rely mostly on local revenue. She indicated that the percentages for last year’s budget were 67% from local taxes, 30% from the state and 3% from the federal government. “Recent state increases have helped,” she said, “But the impact to suburban school districts was minimal.”
What are the district’s budget challenges?
- Dr. Haller explained that while the Elementary and Secondary School Emergency Relief (ESSER) funds that were awarded to the district during COVID were welcome, they provided temporary and unsustainable relief. “For example, the previous administration used some of this money to fund personnel. But we knew that was not sustainable, so as positions have opened up, we’ve been moving people into those positions from somewhere else or not filling it if possible.”
- Dr. Haller said that the district is not immune to inflation, and the district has to pay the rising costs of salaries, benefits, fuel, paper, etc.
- Dr. Haller said that the state has a long list of mandated training, drills, personnel, reporting, policies and plans that they require schools to provide, yet they do not fund these requirements. “While some of these mandates have a minimal impact on our budget, it does add up,” she said. “For example, it doesn’t seem like it would cost us very much to conduct a training, but we have to pay for the training, we have to pay for the trainer, we have to pull people out of class so then we have to pay for a sub. You don’t think they’re a cost, but they cost us something. It adds up.”
- Dr. Haller also said that suburban schools like Exeter are grateful for increased state funding in recent years, but that the impact for districts like Exeter are negligible and hasn’t provided relief to taxpayers.
- Describing special education costs as “staggering,” Dr. Haller said that federal and state funding to accompany what the district is required to provide by law has been minimal. “Pennsylvania’s expectations for special education are more than what the federal government requires. We have significant costs for contracted services, alternative placements and staffing… For example, we’re required that students who need a one-on-one nurse have one that we pay for if their own insurance won’t or can’t provide one. That child has just as much of a right to come to school as a student who doesn’t need a one-on-one nurse.”
- Finally, Dr. Haller said that one of the district’s most significant expenses is the tuition it sends to cyber charter schools for in-district students who choose to attend them. “Exeter spends $1.8 million every year–it’s a significant amount of money. Cyber charter schools charge us the same amount of money per pupil that we spend without the overhead, such as operations, buildings, personnel, transportation, materials.”
Dr. Haller said that the administration is looking closely at what it can do to help reduce expenditures, and said the most significant impact it can have is to look at every single teaching position and eliminate positions when teachers retire.
On December 21, 2022, the district hosted the third of several public budget workshops, which aim to create a forum for community participation as the 2023-24 budget is crafted. Each workshop, which will be held at a different building in the district each month, will focus on a specific presentation of a topic related to the budget. Further, each workshop will include a tour of the building to point out maintenance priorities and discuss capital project needs for that building. The meeting on December 21st was held at Lorane Elementary and included a presentation about expenditures and how they influence the shaping of the budget. The meeting also included a “first look” of the 2023-24 budget.
Superintendent Dr. Christy Haller along with Exeter’s Business Administrator Mr. Brian Feick led the presentation and discussion.
“First Look” of 2023-24 Budget
Mr. Feick presented a “first look” of the 2023-24 budget, which was based upon building and department requests. Both he and Dr. Haller reminded those in attendance that this budget is not final. “This budget is just what everyone requested,” said Mr. Feick. “From here, we’ll go line by line by line and knock it down to where we won’t be cutting down programs or services and we’ll provide a second look.”
The budget he presented showed projected revenues of approximately $81 million and projected expenditures of approximately $84 million. In his calculations, the budget included assumptions regarding increased costs and $580,000 in capital spending for building projects. However, he noted that identified safety and security upgrades estimates are still being compiled and are not included in the first draft of the budget.
“This is literally where we’re starting,” said Dr. Haller. “This is not where we’ll wind up,” pointing to a slide in the presentation that showed a budget timeline allowing the administration to continue work on the budget until May, with final board adoption at the end of June. “Until then, there will be a couple of drafts,” said Dr. Haller.
Inflation and its Impact on the Budget
In a graph, Mr. Feick presented the 2023-24 work-in-progress budget categories compared to those in the 2022-23 final budget, showing increased expenses in almost all categories. Of note, he pointed to the steep increase in the cost of supplies, which he said are being greatly impacted by inflation. “Electric is up from 3.2 to 7 cents per kilowatt hour, gasoline went up a $1.90 a gallon, natural gas is up 10%, toilet paper is up 100%, paper towels are up 200%, floor wax doubled, a carton of paper went from $22 to $38,” he said ticking off major line items in the supply category and reminding those at the meeting that “supplies” doesn’t equate to “pencils” for students. “Even items like (water softener) salt have tripled or quadrupled. We’ve been using the cheapest we can find. We’re going through a skid a month in our bigger buildings. And if you don’t replenish it, you’ll ruin your pipes.”
Director of Operations, Stephen Biggerstaff, who was also in attendance, noted that the projected increased costs were not because administrators were asking for additional items. Instead, he said, it’s just the “exponentially increased” cost of purchasing items to keep the buildings clean, operational and maintained. “We’re cutting back where we can,” he said, indicating that everything will be evaluated, including some of the touch-free items that were brought in during the height of COVID thanks to pandemic-era federal grants, which have now expired. “For example, if we can save money by going back to rolled paper towels in bathrooms rather than the touchless z-folded towels, we’ll do that.”
Special Education Costs
Noting that public schools have many federal and state mandates that require non-negotiable service and programming expenditures, Dr. Haller pointed out that the district, like many throughout the county, are seeing no slow-down of out-of-district student placements for students. “We’ve saved money by having our own emotional support classrooms because we try to keep students here. But if they can’t be appropriately placed here and it’s the right thing to do for the student they may need an out-of-district placement, which is at a significant cost.” She also said that the unknown of who may move into (or out of) the district can have an impact on budget projections, noting that those with considerable medical, intellectual or emotional needs can alter even the best-developed budget projections. “This past year we had several students who were out-of-district placements move unexpectedly into the district; that’s beyond our control and not something we could have anticipated.”
“Please understand that school districts have a lot of obligations we have to meet,” she said. Mr. Feick agreed, and said that federal and state regular and special education mandates continue to roll out of Washington and Harrisburg, but without corresponding funding: “The system is broke,” he said. “We’re fighting with a system that keeps mandating additional things we need to do, but they don’t give us more money (for those mandates).”
Salaries and Benefits
“This budget does not include the addition of any new positions,” said Dr. Haller. “But these (salaries and benefits) are pretty much a fixed cost since they’re contractually obligated. It’s always a consideration to really evaluate what those positions look like, or not filling certain positions, or not filling them through attrition. If we can do that without impacting a program, that’s what we’ll do.”
She also cautioned that people should not interpret her statement as a hiring freeze. “There are certain positions in the school district that need to be (re)filled when someone leaves, but we will reevaluate each position, and we do not intend to add any additional or new positions for next year.”
Capital Projects and Refinancing of Debt
The presentation ended with a brief Board-led discussion about capital projects (which will be the topic presented during January’s budget workshop) and potential refinancing of debt so that unfinished capital projects that were identified more than six years ago by KCBA Architects could be prioritized for completion, perhaps without a tax increase. Indicating that each budget meeting includes a public tour of the building for the public to see first-hand some of the improvements that have been identified but delayed and now need attention, she said that she hoped more members of the community would take an active role in attending the workshops. “We want the community to have a pretty clear idea of what needs to be done in the district to have these buildings be safe and usable. We’re actually coming up to the point where the KCBA facilities study is now six years old and we haven’t gotten through the cycle of things they recommended… We can’t continue to ignore these items that need maintenance or work. We have to think about the quality of a building because kids and staff are in them every day.”