BETHLEHEM, Pa. — Bethlehem Area School District has a nearly $10 million deficit to contend with in its 2025-26 budget, leaving the district no option but to hike property taxes, cut spending and dip into savings.
That’s the conclusion the school board and BASD administrators reached at a Monday budget workshop, though nothing is final.
“The main thing [is] to make sure that we do well by students in their classroom. ... We want to protect and achieve [our district] goals in this budget.”Jack Silva, Bethlehem Area Superintendent
The school board has until May 12 before it votes on a proposed budget. The final budget is approved in June.
“The main thing [is] to make sure that we do well by students in their classroom,” Superintendent Jack Silva said. “We want to protect and achieve [our district] goals in this budget.”
Those goals include improving districtwide attendance and bolstering students’ academic performances, he said.
Still, the district has some tough budgetary decisions to make on the road to meeting its objectives.
As it stands, BASD projects $376.9 million in spending but only $366.9 million in revenue, leaving a $9.9 million gap.
The district’s top cost drivers are salaries, benefits and charter school tuition, which collectively account for 75% of its spending.
Salaries are slated to cost $140.7 million; benefits are projected to sit at $95.9 million; and charter school tuition is estimated at $46.5 million.
Those costs and others, such as debt service payments and tuition for students at the local vocational-technical school, are not discretionary, leaving the district little room to get creative with spending cuts.
“The amount of terrain to be able to make decisions is quite limited in an annual school district budget,” Silva said. “We’ll work with that.”
Based on the preliminary budget, the majority of the district’s funding will come from local sources, accounting for 66% of total revenue, followed by 32% from the state and 2% from the federal government.
Local revenue should come in at $240.7 million; state funds are estimated at $117.9 million; and federal money is projected to be $7.5 million.
Potential tax hikes, budget cuts
In its current local revenue forecast, BASD is relying on a 4% school property tax increase to help bring in an additional $7.87 million compared to last year.
With that increase, the owner of an average home in the district would see their school property taxes increase $107 in Lehigh County or $150 in Northampton County.
The district straddles both counties.
If necessary, school directors said they would consider raising school property taxes by 4.8% — the highest allowed increase for BASD under the Act 1 Index.
“There’s no way around it unfortunately. We had flat increases for a long time.”Michael Faccinetto, Bethlehem Area School Board President
That tax increase would raise $9.45 million in new local funds, which is $1.57 million more than the projected revenue from the 4% tax increase.
With a 4.8% tax hike, BASD residents would see their school property taxes increase $128 in Lehigh County or $180 in Northampton County.
School Board President Michael Faccinetto said a tax hike of some sort is inevitable to help balance the district’s budget.
“There’s no way around it unfortunately,” Faccinetto said. “We had flat increases for a long time.”
The district raised school property taxes — the first time it had done so since 2018 — by 3% last year.
To get closer to a balanced budget, BASD already has considered spending cuts, and more may be needed to further address its deficit, the administration said.
So far, BASD plans to find savings through staff attrition, reducing overtime pay, limiting conference attendance for staff and delaying the replacement of supplies.
Additionally, the district will reduce costs by cutting professional development for teachers that requires substitutes to be hired to cover classes.
Future proposed cuts may include eliminating district positions that initially were grant-funded, and subsequently were worked into the district’s staffing costs.
Other ways to close budget gap
To balance its budget, BASD also plans to dip into its unassigned fund balance, which sits at $16.6 million. The board will discuss at an April meeting how much of that it can use.
BASD administrators and school directors also said they hope state cyber charter reform could free up funds.
In his state budget proposal, Gov. Josh Shapiro once again called for the establishment of an annual $8,000-per-student rate for cyber charter schools to ensure “costs align with the actual expenses of providing an online education,” according to a budget news release from the governor's office.
Shapiro proposed that reform in last year’s budget cycle, too, but it was unsuccessful. If the cyber charter reform goes through this year, Pennsylvania school districts would save $378 million a year.
BASD estimates it would save $3.4 million under the reform, though those savings are not included in its current budget projections.
Under the rest of Shapiro’s 2025-26 budget proposal, Bethlehem Area is set to get $56 million in basic education funding and $10.4 million in special education funding.
Based on those numbers, the district would see $679,955 in additional BEF money and $207,991 in additional SEF money compared with last year's budget.
Additionally, Shapiro allotted $526 million in his proposal for the bipartisan adequacy formula developed last budget cycle.
That formula was created in response to a Commonwealth Court ruling that said the way Pennsylvania funded its schools was unconstitutional, disadvantaging students from poor communities.
But there’s been push back on the adequacy funds from districts that wouldn’t benefit like BASD would.
Under the governor’s proposal, Bethlehem Area would get a $4.5 million adequacy payment — but the district has only factored half of that into its preliminary budget.
That’s to be conservative in case pushback from other districts leads to a reduction in this allotment come June.
'Flat-funded' state budget, federal uncertainty
Overall, board President Faccinetto said he was disappointed with Shapiro’s “flat-funded” budget proposal, which didn’t measure up to historic education investments in recent years.
“I don’t know what his thought process was with it,” Faccinetto said.
“I think we really have to push on our state legislature and our governor to actually put forth a budget like they did last year that truly supports public education, which helps everybody."
“Although it’s a small percentage, it’s a high impact amount of funds in our budget."Jack Silva, Bethlehem Area Superintendent
Additionally, Bethlehem Area school directors and administrators expressed concern about uncertainty at the federal level as President Donald Trump moves to eliminate the U.S. Education Department.
Bethlehem Area is relying on $7.5 million in federal funds for about 2% of its budget.
“Although it’s a small percentage, it’s a high impact amount of funds in our budget,” Silva said.
That money enforces federal mandates and supports vulnerable student groups, such as students with disabilities and English language learners.
If federal funds were no longer given to school districts across the country, that would add to BASD’s existing deficit, Silva said.
Even if the federal government also eliminated the mandates that are tied to that funding, the services would still be needed by students and demanded by parents, Silva said.
“It’s an ugly mess that we’re in but there's no skating service to these kids,” school Director Silagh White added.
Silva said Bethlehem Area’s budget pressures for 2025-26 are more challenging than in recent years.
But they're nowhere near the difficulties faced 15 years ago when then-Gov. Tom Corbett cut $1 billion in state education funding, he said.
As for this year’s budget, Silva said, “It’s stressful because we’re dealing with a lot of things we have no control over, like the federal and state budgets.”
Still, he told school directors not to panic and to keep the district's financial future past 2025-26 in mind, too. Long-term planning is essential, he said.
Bethlehem Area budget discussions will continue at the board's April 14 finance committee meeting.
