The Altoona Area School District’s 2026-27 preliminary budget projects a $3.8 million shortfall, which could be wiped out entirely if the district receives the full amount of Ready to Learn funding proposed in Gov. Josh Shapiro’s state budget, business manager Sue Franks said.

The district’s projected local, state and federal revenue total is about $128.6 million and projected expenditures are budgeted at $132.4 million, Franks said Monday during the school board of directors’ committee of the whole meeting.

The district’s foundation for Ready to Learn has been about $4.5 million over the past two years, which Franks said the district is “almost guaranteed” to receive from the state this year.

Under Shapiro’s proposed budget, Altoona Area would receive another $4.5 million in state adequacy funding, Franks said, noting the Ready to Learn foundation would also increase to $9.2 million.

If the district would receive the full amount, it would receive nearly $14 million in adequacy funding, Franks said, adding she budgeted to receive slightly more than $6 million.

In other words, Superintendent Brad Hatch said Altoona Area isn’t planning on receiving the full allocation that’s based on projections.

“We can’t necessarily budget for that because we won’t know for sure until a budget is passed,” Hatch said. “We are not planning on spending money that is not going to be a guaranteed thing.”

If the money would come to fruition, Hatch said the district would have the flexibility of allocating and funding its capital reserve fund, which has “more than enough need and projects to be able to utilize that funding.”

With the district’s projected expenditures, the budget is left with a nearly $3.8 million deficit, of which only about $1.1 million could be acquired through raising local taxes to the state’s Act 1 Index of 5.1%, Franks said.

Should the board choose to raise taxes this year, a 5.1% increase would take the district’s millage rate from 7.0877 to 7.4492, which would generate about $1.1 million, Franks said.

Tax on a $108,000 property with the Homestead/Farmstead exclusion would increase $25.93 while the rate on a property of the same assessed value without the exclusion would increase by $39.04, Franks said.

A 3.5% increase from the base would generate $777,594 in revenue, Franks said.

Board member David Francis said the board might need to consider a slight tax increase, noting the district’s salary wage costs and health benefits costs are forecasted to increase about $4.5 million and about $2 million respectively by 2028-29.

The board might be able to put off the conversation of raising taxes this year, but it’s something they’ll need to consider to combat rising costs, he said.

“That’s a lot of money and you just can’t do it with our tax base right now,” Francis said.

Should the board choose to raise taxes to the Act 1 Index and not receive its anticipated state revenue, the shortfall would be covered by the district’s general fund balance of about $34 million, Franks said.

The board is expected to pass its preliminary budget in May. State law requires the district to adopt a final budget by June 30 every year.

Board President Val Mignogna said he thinks the board having to pass a budget before knowing its revenue allocation from the state is “the inherent problem with how this whole system works.”

“It just blows my mind that we continue to do this — not us but the state, the system,” Mignogna said.

Last year, the state budget wasn’t signed into law until mid-November, which ended up costing the district about $200,000 to $300,000 in interest after cashing in some assets early, Franks said.

Hatch said the district was “lucky” the budget passed before the board approved a loan to cover its expenses.

“We didn’t have to follow through with that line of credit. So, that was a good thing,” he said.

So, what happens if there’s a budget delay this year, Francis asked.

Franks said the district has learned its lesson and repositioned its investments to mature in July, August and September, ensuring the loss in interest revenue will be “substantially less” if the state budget doesn’t pass on time.

“If we have that problem again, we have the investments that we can cash out without any penalty,” Franks said. “And if we’re lucky enough to have the budget pass on time, we could just reinvest that money moving forward.”

Mirror Staff Writer Matt Churella is at 814-946-7520.