New Kensington-Arnold facing $1.5M deficit in 2021-22 budget

Without a tax increase, New Kensington-Arnold School District is looking at a $1.5 million budget deficit for next school year that would force it to empty its reserves.

The school board’s finance committee met virtually Monday to review the district’s proposed final 2021-22 budget. It would spend $38.7 million on $37.2 million of revenue. Although the school board has approved asking the state for permission to potentially increase its property tax rate by more than its 4.4% limit, Business Manager Jeff McVey presented a proposed final budget to the committee that includes no tax increase.

McVey said the district is projecting a nearly $573,000 deficit in the current school year, driven in large part by cyberschool tuition costs. That would reduce the district’s fund balance from about the $1.6 million it had as of June 30, 2020, to slightly more than $1 million. A $1.5 million deficit next school year would exhaust the district’s reserves and leave it nearly $500,000 in the red at the end of the school year in 2022.

Although the district expects to receive $5.2 million in a second round of federal pandemic relief funding, McVey said the budget does not include any of that money yet.

“We won’t know for certain until we submit our grant and it is approved, but we are expecting to see some positive impact on the general fund budget by shifting extra expenses and a couple of positions into the grant,” Acting Superintendent Jon Banko said.

The district currently has a proposal to spend about $4.7 million of the grant funding, leaving almost $500,000 yet to be allocated, according to Banko’s presentation to the finance committee.

Banko said the district needs to account for how it will spend all of the money before applying for the grant. He said administrators have discussed building ventilation systems and air conditioning, but he is not sure $500,000 is enough for that.

“We can start looking into what options are out there for improving ventilation in schools,” he said.

The largest proposed uses for the grant funding include:

• $1.8 million for additional cyberschool tuition costs.

• $633,000 for three years of digital textbook resources.

• $600,000 for two instructional technology integration specialists for two years.

• $408,000 for 1,200 iPads for students.

• $240,000 each for two contracted social workers for two years, a junior-senior high school success coach for two years, and daytime custodians.

While McVey said few believe Gov. Wolf’s state budget proposal with increased school funding will get through the Legislature, he is including a 2.5% increase in state funding. McVey said the district may have its budget approved before the state finishes its own.

Under Wolf’s proposal, McVey said New Kensington-Arnold would get $12.8 million in basic education funding, which would be an increase of $1.3 million, and $2.14 million in special education funding, which would be a $400,000 increase.

On the spending side, McVey said the budget includes a nearly 9% increase in central administration spending, from about $591,000 to about $642,000, to account for the salary and benefits of a new district superintendent. The district is working with the Pennsylvania School Boards Association to find a replacement for former Superintendent John Pallone, who resigned last year.

The district would also be back at full spending, about $1.8 million, for a full year of student transportation, assuming the district will be operating normally after the covid pandemic, McVey said. The district, which currently has its contract with W.L. Roenigk, is preparing to seek proposals for busing.

At the committee’s request, McVey will be preparing a three-year projection on the district’s finances.