Derry Area School Board holds tax line for 2024-2025, eyes $1.2 M in capital projects

Derry Area residents will see their school property taxes hold steady for the fourth year in a row under the district’s tentative $43.4 million 2024-25 budget.

Approved at this past week’s school board meeting, the proposed budget calls for tapping the district’s fund balance to cover a $2.1 million gap between planned expenditures and projected revenue of about $41.3 million. That will allow the district to hold the property tax line at 91.8 mills.

“We’re in a pretty good position now with the fund balance.” district business administrator Scott Chappell said. “We’re still in good financial shape.”

At the end of next school year, the district expects to have nearly $5 million remaining in its unassigned fund balance, equaling roughly 11.5% of budgeted expenditures.

The proposed budget represents a decrease of about $249,000 from district spending in the current school year.

Transportation costs are expected to drop by about $40,500, or 1.6%, as the district enters the final year of a three-year contract with Smith Bus Co.

“We saved a little bit on our fuel through joint purchasing and we were able to cut a bus route,” Chappell said. He noted many students at Grandview Elementary are being dropped off by parents.

Chappell said the district has eliminated about 30 staff positions through attrition since the 2017-18 school year, to help curb rising costs in the face of Derry Area’s gradual decline in enrollment. This year’s enrollment of 1,776 represents a loss of 51 students since 2020-21. State education officials project that number will drop by 50 more two years from now.

For 2024-25, the district is not planning to replace its retiring associate middle school principal. If kindergarten enrollment reaches 115 students in the fall, Chappell said, the district may want to hire a permanent replacement for a teacher who resigned this school year. A long-term substitute has filled the gap so far.

As of April, there were 103 incoming kindergarten students registered.

Costs for special education and employee medical benefits continue to rise at Derry Area, Chappell said. Not counting those who are placed in learning environments outside of the district, about 17% of Derry Area students have an individualized education program.

Medical plan costs are set to increase by 12%, up from the previous year’s 10% hike.

“Those are huge hits to continue taking year after year,” Chappell said. “Every district is going through this in the consortium we’re in.”

Chappell recommended committing $1 million of the district fund balance toward potential future increases in health care costs.

He said the state funding Derry Area receives to support homestead and farmstead real estate tax reductions is slated to increase from $1.2 million to $1.46 million. That means the tax reduction for each eligible property owner could rise from the current year’s $258 to as much as $320 next year.

About $1.3 million in remaining funding from the expiring Elementary and Secondary School Emergency Relief program has been allocated for various expenditures. That includes replacement of windows that were installed more than 30 years ago at the combined middle school/high school building, Chappell said.

The expected start of that project was moved back from May to June.

“We’re seeing a little bit of a delay in the delivery of the windows,” Chappell said.

Derry Area expects to spend $1.2 million from its capital project fund in the coming year. That includes $130,000 budgeted for road and parking lot improvements at Grandview Elementary and $125,000 to replace the public address system at the high school.

District officials are mulling potential longer-range renovations at the secondary school building that wouldn’t have an impact on next year’s budget.

The school board is slated to adopt a final version of the 2024-25 budget in June.