Bethlehem Area School Board approves a 4.3% tax hike as federal and state funding remain uncertain

BETHLEHEM, Pa. — Bethlehem Area School Board on Monday approved a $373.2 million final budget for next fiscal year with a 4.3% tax hike.

School directors voted to approve the 2025-26 spending plan, with the exception of M. Rayah Levy, who was absent.

This is the second year in a row the school board has raised taxes after a previous five-year stretch without any increases.

The 4.3% tax hike is just 0.5% less than the maximum increase the state allows for Bethlehem Area School District.

“I hate a tax increase that high,” board President Michael Faccinetto said.

“If you pull that tax increase out, the deficit is sky high. So I don’t like it, but I don’t know that we have much of a choice, and I think it’s the right decision at this point.”

When the school board began discussing the budget in March, it was staring down a nearly $10 million deficit.

The district administration has since closed that gap by increasing the school property taxes, as well as by cutting expenses and pulling funds from the district’s savings.

Tax hike’s impact

The new millage rate for Bethlehem Area residents in Lehigh County is 19.42 mills, and in Northampton County it’s 63.17 mills.

In Lehigh County, the average assessed value of homes for tax purposes for Bethlehem Area residents is $142,700.

With the 4.3% tax increase, the average homeowner in Lehigh County will pay $97 more in taxes, bringing the average tax bill to $2,771.

Some residents who qualify for the state’s homestead property exclusion program will see a $48.93 reduction in their property taxes, meaning their net tax increase is only $48.07.

In Northampton County, the average assessed value of homes for Bethlehem Area residents for tax purposes is $62,500.

With the 4.3% tax increase, the average homeowner in Northampton County will pay $180 more in taxes, bumping the average tax bill to $3,948.

Again, some residents who qualify for the state’s homestead property exclusion program will see a reduction in their property taxes. In Northampton County, that reduction is $48.95, meaning their net tax increase is only $131.05.

Spending Cuts

Additionally, the district closed its deficit in part by cutting about $3.4 million in spending.

Those cuts include the elimination of 20 full-time equivalent positions, largely through attrition.

The eliminated positions also include some non-classroom employees, such as instructional coaches, who were initially funded by grants and later worked into BASD’s budgets.

BASD’s enrollment has decreased, the administration said, which lets it make position cuts while keeping student-to-staff ratios in check.

Additionally, the district found savings through reducing overtime pay, freezing conference attendance for staff and delaying the replacement of supplies.

BASD will also reduce costs by holding professional development for teachers at times when the district won’t need to hire substitutes to cover their classes.

“I think the administration did a good job of looking for some of those position eliminations that were through attrition and trying to find some savings,” school Director Michael Recchiuti said.

The district also plans to use $5.7 million from its fund balance to help close the budget deficit.

State federal funding uncertainty

Though the school board approved its budget, the final funding numbers from the federal and state governments aren’t in yet.

At the federal level, President Donald Trump’s efforts to reimagine the public education system have caused uncertainty for school districts' leaders, who fear their funding for students with disabilities and English-language learners may be at risk.

But federal education funds are usually flat each year and represent a small part of BASD’s revenue at 2%, Superintendent Jack Silva told LehighValleyNews.com.

“It would be very unusual for it to go up or down significantly,” Silva said.

Still, the district hasn’t received its federal funding numbers yet, and it normally does by this time each budget cycle. BASD expects an update from the federal government in mid-June.

At the state level, the legislature still hasn’t passed a budget and may not until September, according to BASD’s administration.

The district is estimating it will get 100% of Gov. Josh Shapiro’s proposal for basic and special education funds.

Under that assumption, BASD would get $56 million in basic education funds, which represents an increase of $679,955 from the year before.

Special education funds would come in at $10.4 million, which would be a bump of $207,991 from the previous budget.

“Hopefully, it at least comes in at what we budgeted,” Board President Faccinetto said. “If not, we’re going to be in rough shape, not to mention the federal uncertainty.”

Adequacy funding

BASD also projects additional adequacy supplement funds.

Last year was the first time poor school districts across the state received that money to address their chronic underfunding.

The adequacy supplement money was the result of the state responding to a Commonwealth Court decision from a Republican judge who deemed Pennsylvania’s education funding system unconstitutional.

The judge ruled that students who live in neighborhoods with low incomes and low property values were at a disadvantage. The adequacy supplement was meant to help close that gap.

Shapiro proposed sending Bethlehem Area $4.5 million more in supplement money, taking the total for that funding to about $9 million.

BASD estimates it will only get about half of the proposed increase, bringing its projected total adequacy supplement funds to $6.8 million if that’s the case.

The district will use its guaranteed adequacy funding to maintain programs, such as full-day kindergarten, according to a fact sheet from PA School Works, a public education advocacy organization.

With any increases to the adequacy funding, BASD will use those funds to hire more teachers, social workers, school counselors, paraprofessionals and other support staff.

The funds also would go toward school facilities improvements, new instructional materials and other costs.

While school directors are hoping for additional funding, they aren’t optimistic about the outlook, and that’s reflected in the district’s funding projections.

“It’s smart that we’re being conservative,” school Director Karen Beck Pooley said. “We’re approaching this season with caution when it comes to money coming in from the state and the federal government.”

Cyber Charter Reform

Beck Pooley also noted there’s been some movement on cyber charter reform at the state level.

Last week, the state House passed legislation that would cap cyber charter tuition costs at $8,000 and establish a statewide formula for special education tuition.

Beck Pooley said the legislation would better align cyber charter tuition with actual expenses while increasing accountability and transparency from those schools.

According to the state House, Pennsylvania school districts as a whole would save 50% of the money they currently spend on cyber charter expenses. That would equate to $616 million in savings.

“That stands to impact the [BASD] by about $5 million,” Beck Pooley said. “That is a conversation that’s underway.”

But the legislation likely faces a challenge in the Republican-controlled state Senate.