SCASD Revenues, Expenses Outperformed Budget for 2025-26

State College Area School District got some good news as it prepares to close out the books for the 2025-26 fiscal year.

Total revenue for the year was $4.175 million higher than budgeted, while total expenses came in $4.5 million under budget, district administrators said in a review of unaudited final results at Monday night’s school board meeting.

Revenues saw an increase of 2% above the budget largely due to real estate transfer tax income of $4.2 million, about $1.7 million more than budgeted, and investment income of $4.57 million, about $2.3 million above projections.

“We were able to take advantage of higher interest rates, and as we’ve seen and heard, that can be a fairly volatile market that cannot be trusted to budget upon,” Joe Viglione, assistant business administrator, said.

Viglione noted that real estate transfer taxes are variable as well, and the sale of one or two large properties can have a big impact.

The district also received $23.59 million in earned income taxes, a $250,000 increase over the budgeted amount. While that fell within 1% of projections, it marked a positive turn for a revenue source that had been on the decline.

“Last year, I had sat up here and told you that I was a bit worried about a three-year decline that we were seeing in the percentage increases associated with the earned income tax,” Viglione said. “We’ve seen a nice bounce back this year and a stabilization over the 10-year norm. What was a concerning trend through last year has been mitigated.”

Other revenues were essentially in line with budgeted amounts. State revenue was $343,000 below budget and federal was $51,000 below, both primarily the result of lower-than-projected expenses.

Expenses were about 2% under budget, primarily due to unfilled positions. That resulted in salary savings of $1.2 million, or 1.29%, and benefit savings of $1.9 million, or 3.09%,

Whether those positions remain open and for how long depends on various factors, said Randy Brown, finance and operations officer.

“It can mean a position was vacant for part of the year because it wasn’t able to be filled for the whole year until we got it, depending on when the opening became available,” Brown said. “It can also mean we have a set number, especially in the elementary world, of teacher and para positions that, based on our class guidelines, we don’t always fill. That’s why we have that open position. So it can mean a couple of different things and it depends on our enrollment and our classes, class makeup for this year, whether they’ll be open again next year.”

District administrators proposed two fund transfers for the board to consider when it votes on approving the financial statements later in October.

One would transfer $4 million to the the Capital Project Fund to help close the funding gap for the district’s 10-year capital improvement plan.

“We’ve been presenting the needs for the facilities across the district, and the shortfall was well in excess of the $4 million that we are looking at transferring this year,” Viglione said. “… It still doesn’t fully fund it on an annual basis.”

He added that about $7.5 million more would be needed to fully fund the plan over 10 years.

The other transfer would move $22 million of committed fund balance for debt service to the Capital Reserve Fund, primarily to be used for the new Park Forest Middle School.

“It will still be used to pay debt service and/or capital costs, just as its original intention. It will just be in a different fund,” Viglione said.

Brown previously explained that using capital reserves for construction costs can help reduce the amount the district needs to borrow and finance for building projects.

With the transfer, the Capital Reserve Fund would have about $80 million to be used toward the new middle school and final expenses on the recently completed Mount Nittany Elementary School expansion.

The projected budget for the Park Forest project is $137.5 million, and the board also heard results of bond sales that, in part, will be used to fund it.

Through underwriter Bank of America, the district sold $109.2 million in general obligation bonds in August, with $66.7 million to be used for the Mount Nittany Elementary and Park Forest Middle projects and $42.5 million to refinance a portion of the district’s 2015 high school referendum debt.

Eugene Spinelli, of Bank of America, said the bond sale was “very well received” during a highly active week for municipal issuance in the market, and strong investor demand enabled favorable pricing for SCASD compared to other school districts.

“From a headline perspective, the transaction was very strong,” Spinelli said.