The deficit for the 2026-27 Northampton Area School District budget has been reduced by an estimated one-third to $9.3 million, down from $12.7 million. NASD Business Administrator Craig Neiman announced the deficit reduction during a budget update presentation and discussion at the board of education meeting March 9 in the Northampton Area High School auditorium.

The 2026-27 preliminary budget, with a deficit of $12.7 million based on expenditures of $154.8 million and revenue of $142.1 million, was presented at the Jan. 12 school board meeting by Neiman.

“You’re going to have to give us some direction,” NASD Superintendent of Schools Joseph S. Kovalchik said to school directors at the March 9 meeting. “The finance committee has no formal recommendations because they need more information.”

The finance committee, at a meeting March 5, discussed deficit-reduction proposals that included eliminating middle school athletics, band, chorus, orchestra, world language and student clubs. Finance committee members asked Neiman to present possible cuts to high school programs.

At the March 9 board meeting, Neiman presented finance committee discussion items that would eliminate middle school and high school athletics, band, chorus, orchestra and world language and high school elective courses and student clubs, for a savings of $7,576,000.

Also in finance committee discussion for elimination and savings: 1:1 student devices, $576,000; 10-month building secretaries, $715,000; indoor air-quality testing, $12,000; per capita tax administration, $40,000; outside use of facilities, $25,000; community education, $16,000; and Northampton Area Public Library funding, $270,000. Also discussed was reducing staff professional development at $25,000 and adjusting district buildings’ temperature set points at $50,000.

Total savings would be $8,729,000.

There would be an increase of $913,332, including for supplies, curriculum changes, instruction assistants, adding computer lab classroom and loss of per capita tax levy.

Neiman represented two options for the school board to consider to reduce the deficit.

Option 1 reductions and savings would involve eliminating capital reserve transfer, $1 million; utilizing bond fund interest earnings, $1.2 million; using one-half of building sales proceeds, amount to be determined; increasing earned income tax by 4.2%, $500,000; and increasing millage rate 4.2%, $3.5 million, for an adjusted deficit of $3.1 million.

Option 2 reductions and savings would include finance committee discussion items, $8.7 million; finance committee offset items, $900,000; increase earned income tax by 4.2%, $500,000; and increase millage rate 1.25%, $1 million, for adjusted deficit of 0.

Neiman discussed the impact of Options 1 and 2 on the capital reserve and the fund balance.

Neiman listed budget deficit reductions as of the March 9 meeting:

• Charter schools tuition rate formula reduction of $1 million, from $10 million to $9 million. Neiman said the reduction is based on a revised Pennsylvania Department of Education formula for funding charter schools.

• Staffing adjustments reduction of $2 million. There will be 21 district positions impacted. The savings includes salaries and benefits. The reductions by classification are: 5% administration; 3% teachers; and 4% support staff. The reductions are because of district redistricting and programming changes.

• Technology department reduction of $200,000.

• Bonds refinancing savings of $200,000.

• Transportation efficiencies reduction amount to be determined, if any. The administration is exploring opt-out waivers for students taking buses, parent transportation agreements, transportation hubs for charter school students similar to district busing for Bethlehem Area Vocational-Technical School students and reduction in bus runs pertaining to elementary schools redistricting.

• Health care benefits reductions to be determined, if any. The benefits are included in district union contracts, which are not expected to be up for renewal in time to be included in 2026-27 budget.

• Sale of district buildings to be determined. It is uncertain if the sales would close in time for revenue to be included in 2026-27 budget.

• Governor’s budget proposal is not expected to provide additional funding for 2026-27 budget. Gov. Josh Shapiro’s Feb. 3 budget proposal provides $167,570 less in basic education funding than the preliminary budget and $84,440 more in special education funding than in the preliminary budget.

The governor’s budget provides $458,012 more in ready-to-learn adequacy funding, which NASD does not qualify for. The net impact of state funding is $374,882 more than in the preliminary budget.

“Given the anticipated legislative budget process, (the) administration recommends no changes to preliminary budget estimates,” Neiman stated in his budget update.

Neiman presented four tax options, including a tax increase of 4.2%, the maximum Act 1 Index allowed, based on a 2.46-mill increase, which would generate $3,454,302 in revenue, for a $154.84 average annual tax bill increase and $12.90 monthly tax increase based on the district average 2025 homestead assessment of $63,000.

The NASD school board voted unanimously 9-0 at the Dec. 1, 2025, meeting to approve a resolution “to not raise the rate of any tax for the 2026-27 fiscal year by more than its index.” The maximum Act 1 Index allowed NASD for the 2026-27 budget is a tax increase of 4.2%.

Kovalchik said the school board needs to provide the administration guidance at the next board meeting, set for 6:30 p.m. April 13 so the proposed final budget can be presented at the 6:30 p.m. May 11 board meeting. The budget must be advertised and be available for public inspection 30 days before a school board vote.

The board is expected to vote on the final budget at the 6:30 p.m. June 15 meeting. Commonwealth law requires school boards to finalize the district budgets by June 30.