North Allegheny's preliminary budget includes slight millage increase

A slight increase in taxes is proposed for the 2026-27 North Allegheny school year, at an estimated 20.43 mills from the current 19.74 mills.

The school board still has to vote on the proposed increase and final budget set for May 20.

The millage rate is in accordance with the Act 1 index set at 3.5% for North Allegheny for 2026-27 by the Pennsylvania Department of Education. The school board approved not to go above this rate during its Nov. 12 meeting.

“We have been able to keep very flat millage rates for the past seven or eight years with just a few millage increases at that time,” said Kermit Houser, finance director for the North Allegheny School District.

The annual impact of this increase is $69 for every $100,000 in value, or about $6 per month. For a North Allegheny home with an average assessed value of roughly $254,000, the increase would reflect about $175 annually, or $15 per month.

The Act 1 Index equates to about $4.5 million of additional annual revenue, according to Houser’s presentation.

Comparing 2025 to 2026 millage rates, North Allegheny sits fourth lowest out of 41 comparable districts in Allegheny County, where the average millage rate is about 25.69 mills. Pine-Richland currently is lower than North Allegheny at 19.58 mills in the current fiscal year, according to Houser’s presentation.

The preliminary 2026-27 budget is listed at more than $212 million in expenses and more than $211 million in revenue.

However, there are still a lot of unknowns as of now, including assuming the growth rate within the district, which the finance department is budgeting at 1% for next school year. This includes residential, commercial and other growth in the entire district.

“This really determines how much revenue that we can expect for next year,” Houser said.

“A drop in common level ratio really hurt us on the growth rate,” which effects real estate values, he said.

Right now, there is a less than zero percentage. A 1% increase equates to $66 million in assessed value.

Allegheny County releases a blotter in January with new property additions that are not incorporated currently, which will provide a better picture.

Some of the district expenses projected for 2026-27 for next year reflect more than $98 million in salaries and $68.7 million in benefits.

There’s a $1.1 million one-time expense for English Language Arts textbooks, and third-party transportation continues to be monitored as well as outside tuition costs.

One ongoing cost continues to be the Pennsylvania School Employee Retirement System rate, which will increase annually until 2035 when it’s expected to be more than 39%.

The state reimburses the district for 50% of what it is required to pay out to fund this annual expense.

PSERS rates are estimated to increase from 34% in fiscal year 2025-26 and are expected to continue to rise to more than 39% by 2035.

Houser also noted the Federal Reserve lowered interest rates to between 3% and 4.25% in October and may even lose another quarter point.

The higher the rate, the more interest earnings the district earns, as noted in the presentation.

“Every quarter of a point that it decreases costs the district about $185,000 of earned income,” he said.

There are too many unknowns at this early in the budget process at this time, he said.

As of Oct. 31, after projected and pending expenses, the capital reserve fund available balance is $3.5 million. A technology fund has nearly $1.2 million in sustainable infrastructure available after expenses, and a 2019 bond fund has $367,175 after projects encumbered. As of this date, these are unaudited numbers.

The district’s credit rating is at a preferable double AA stable. This may help with acquiring seed funding for a $10 million bond, hopefully within the next two years, according to Houser.

At the end of a five-year outlook with a 2026-27 millage increase and no additional debt, the expenses will start outpacing district revenue. Even so, there would still be a fund balance at the end of 2031.

The preliminary budget will be followed by an updated proposed final budget in March or April to be approved by the board. The final budget is scheduled to be reviewed and approved by the board on May 20, with it being effective July 1.

“We do take a look at our five strategic goals and include them as we go through and prepare our budget and as we look at future expenses,” Houser said.

Looking ahead, the total costs of Hosack, Ingomar, Peebes and the phase one of the high school is projected at $63.6 million, according to a September update to the school board.

The total estimated borrowing for the first phase is $145 million with a proposal of borrowing split into three separate issuances from 2027 to 2029, according to NA Finance Director Kermit Houser at the january meeting.

In spring 2026, the district will look into seed funding for the initial phases of the elementary, NASH and NAI projects and spring 2027 second issues for primary work there. Next steps debt would incorporate long-term projects into the future budget planning and debt schedules, according to Houser.

Early estimates for the second phase of renovations are $85 million which wouldn’t be until 2033 and 2035.

McCandless resident John Harrison commented the district should focus on needs more than wants when designing facilities, planning for buildings that will last 20 to 30 years.

“When we’re planning for these things, we don’t have to have a stadium like Pine-Richland. We’re North Allegheny. We’re already superior to everyone. Put the money where it’s going to be beneficial to the students and the teachers that are in those buildings,” Harrison said.

The 2026-27 budget presentation is available under the Finance Department tab at northallegheny.org.