The Northampton Area School District is between a budget and hard place.

The result may mean higher than anticipated school district taxes for NASD property owners.

Superintendent Joseph Kovalchik and Business Administrator Terry Leh have been updating the school board on the fiscal challenges facing the district as the state-mandated July 1 approval deadline of the 2013-14 budget looms.

"What we are looking for is some kind of direction," Kovalchik said to the school board.

Two NASD school board meetings are scheduled this month: 6:30 p.m. May 13 and 27. Only two regularly scheduled board meetings are set for June – 6:30 p.m. June 10 and 24 – in which to approve the final budget.

At the April 22 board meeting, Kovalchik and Leh reviewed the main points of their April 8 PowerPoint budget update regarding increased costs, fixed costs and other factors, some of which have arisen since their first budget presentation Jan. 14.

The NASD board appears divided over additional taxes.

At the April 22 meeting, school board President David Gogel, and school board members Jean Rundle and Darin Arthofer indicated they would oppose raising taxes higher than the 2-percent tax increase index allowed by the state for NASD.

NASD has maintained tax increases under the 2-percent tax state index for the past two budgets.

"The boards have done a good job in monitoring expenses," Kovalchik said.

"We have been under the index until this time," said Leh.

"I'm still at 2 percent on this budget. That's our index. That's my ultimatum," Gogel said.

"We will continue to work on it," said Leh.

"We're going to do everything we can to get it lower. I just don't know if we can get it to 2 percent," said Kovalchik.

"We'll go up there and start working on it again," Leh added, referring to administration building offices.

"I'll make the coffee," offered school board member Jennifer Miller.

The administration would need to cut an additional $460,000 from the budget to get down to the state index, according to Leh.

PFM, financial consultant for NASD, recommended the administration seek Act 1 exceptions with the Pennsylvania Department of Education (PDE). The NASD board approved the request.

PDE approved Act 1 exceptions for NASD for $311,886 in special education and $738,185 in Public Safety Employees' Retirement System (PSERs) for a total of $1,050,071, or 1.91 mills.

"I'll suggest a zero increase," said school board member Jean Rundle. "I don't like that we have these exceptions hanging over our heads. I won't vote for them."

If the full amount of the allowable state increase was approved, based on the average $57,376.49 NASD property assessment, the tax increase would be 4.09 percent, from 46.65 mills for 2012-13 to 48.56 mills for 2013-14. This represents an increase of $109.59 annually, $9.13 monthly and $2.11 daily.

The NASD administration is asking the school board to consider a tax increase, based on the average $57,376.49 NASD property assessment, of 2.68 percent, or 1.25 mills, from 46.65 mills for 2012-13 to 47.90 mills for 2013-14. This would increase the annual tax bill from $2,676.61 to $2,748.33, or an increase of $71.72 annually, $5.98 monthly and $1.38 daily.

"We may have to do a couple of tax increases. I don't want to," said school board Vice President Jane Erdo.

"Maybe it's time to look at an entertainment tax – like maybe for the golf courses," Erdo suggested.

"I realize we can't go to zero, but if we can go a little lower without doing devastation to our school district, I would appreciate it," Rundle said.

"There's some way we have to adjust our expenditures to income," Gogel said. "There's no way we are going to balance our budget on the backs of taxpayers. We have to somehow hold back the money that's being paid out of this place. We can't keep going like this."

"I agree with David and Jean a lot," said Arthofer.

Kovalchik said the district needs to replace teachers who are retiring, including four science teachers. He said 55 teachers have not been replaced in the past three years. If increased revenue isn't approved to fill teaching positions, class sizes could increase to 40 students per class.

"Raising class sizes is detrimental in the short term and long term," said board member Judy Odenwelder.

"We're going to have decisions on both programs and facilities," said Kovalchik.

"I don't want to raise taxes, either. Do you think I want to raise my father's taxes, who is on a fixed income?" asked Kovalchik. "We can still balance this to a certain degree to meet the education needs and not overtax the district."

At the April 22 meeting, Erdo moved, and the board approved, the addition to the agenda of a mechanical construction contract bid for a chiller (rooftop cooling system) for George Wolf Elementary School to ASC Refrigeration Co., Catasauqua, for $291,999. The board voted 8-0, with one school board member absent, to approve the bid.

Following is an overview of NASD 2013-14 budget considerations, as outlined by Leh and Kovalchik.

Health care

Prior to the Affordable Health Care for America Act, the district anticipated $853,929 in health care costs. NASD administrators forecast an additional $500,000 in health-care costs for a new total of about $1.3 million.

The increase is because NASD must now provide health care for part-time employees, or those who work a minimum of 30 hours.

"So, now, all of a sudden, we're paying benefits for substitutes," claimed school board member Dr. Michael Baird. Security force personnel and hall monitors may also need to be covered.

Leh said that if coverage is not provided, NASD could face a penalty of up to $1.2 million.

"The projection for health care costs increases is 9 percent per year," Leh said.

PSERs

NASD must offset $1,808,854 in Public Safety Employees' Retirement System (PSERs) because of state underfunding, with 50 percent taken from the NASD fund balance.

Middle School Project

The budget includes .29 mills to fund the Northampton Area Middle School and Secondary Campus Renovation Project. This is a reduction from the original .52 mills set aside.

Keystone exams

An estimated 60 percent of students statewide are expected to fail the Pennsylvania Keystone Exams (Keystones), which are replacing the Pennsylvania System of School Assessment (PSSAs).

If that average holds true for NASD, teachers will need to be hired to provide remedial instruction for students who don't pass the exams.

"We have to put money away – more than ever – for remediation," Kovalchik said.

State Funding

An additional $200,000 in basic education funding is to be allocated NASD by the Pennsylvania Department of Education.

However, Leh has not included this amount in the budget because the funding is not guaranteed.

Sequestration

The NASD administration expects to receive a $65,820 federal funds reduction and an $86,000 Keystone to Opportunity grant reduction, because of automatic spending cuts to the federal budget, also known as sequestration.

Cyber-Charter Schools

It costs NASD $9,304.41 per regular-education student and $20,504.63 per special-education student.

Unexpected Expenditures

NASD is paying $94,262 in sinkhole repairs at the George Wolf Elementary School, Bath.

Transportation

NASD spends $1.6 million on nonpublic student transportation, $1.1 million on special-education student transportation, $180,000 in vocational-technical student transportation and $36,000 in homeless student transportation. State reimbursement is 50 percent.

"It's not just the buses that roll down Laubach Avenue every day," said Kovalchik.