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A wave of property tax hikes is set to sweep school districts across Southwestern Pennsylvania as costs rise and COVID-19 relief funds run out.
As school boards adopt new budgets this month, several already have announced tax increases: Freeport in Butler and Armstrong counties, New Kensington-Arnold in Westmoreland County, and Upper St. Clair in Allegheny County, among others.
And for others, the clock is ticking on crucial budget decisions — and some say tax hikes seem inevitable in coming years.
"I don't want to raise taxes, but I don't know what else to do,” said Gregg Paladina, superintendent for New Castle Area School District.
For many, costs are rising without a substantial increase in revenue. To fill that gap, districts are considering furloughs, program cuts, and tax increases.
It’s a growing set of challenges: rising health care costs, cyber charter school tuition, rising everyday expenses, and planning for the first fiscal year without the ability to use COVID-19 relief funds.
Indiana Area School District is dealing with all of the above, prompting the administration to recommend a tax hike. The school board is expected to vote on increasing taxes by 5.2% on June 23, which would bring in around $1.8 million.
For the owner of a $150,000 home, that is $2,607 in taxes, compared to $2,479 last year.
The district’s preliminary budget is around $69 million, most of which goes to staffing, Superintendent Robert Heinrich said. Health care costs have gone up 30% in the past two years. In the coming year, it'll be up another 12%, he said.
“When you cut anything out of our budget, you're cutting people, which has an effect on the local economy, as well as the program that you're putting together for the taxpayers’ children,” Heinrich said.
Combine that with the rising cost for food and supplies and the budget has grown, on average, a little under $2 million each year.
“We started to get to a place where it was clear that we were going to have to raise taxes,” Heinrich said. “The increase in costs started to exceed what we were bringing in tax revenue right around COVID.”
An influx of a few million in COVID-19 relief funding “staved off the potential problem,” Heinrich said, but now the money is gone.
The district is looking at a $6 million deficit if the tax increase isn’t approved, a number that would mean spending nearly all of the fund balance.
“It's not a crisis just yet, but it's approaching that quickly,” Heinrich said.
Ashley Clouser, a parent of two children in the Indiana Area School District, said that while class sizes seem manageable, the district needs more support staff. She said the pay isn’t competitive with some other jobs.
“My son has had a new aide every year since he started with one in 2020-21,” she said.
Clouser said as an immediate need she also would like to see the district invest in providing air conditioning in all buildings “because when it is hot those kids are miserable and hot and that leads to less education.”
Nearby Karns City Area School District is also grappling with increasing costs. The board on June 16 approved a $26.69 million budget with a 3% increase in millage rate in Butler County, 3% in Clarion County, and 2% in Armstrong County. These increases in all the three counties that make up the district will bring in $150,000 for a special education life skills class for elementary students.
“We're very mindful of the fact that if we levy a tax increase, that does place a burden on taxpayers,” said Eric Ritzert, superintendent for the district.
The bulk of the district’s fund balance is set aside for work on buildings, such as consolidating two elementary school buildings into one last school year.
Without using the fund balance, options to manage a growing budget are slim, Ritzert said
Ritzert suggests that the state should change the system requiring public school districts to pay a per-student sum to cyber charter schools when those students opt to enroll in those institutions outside the district. Other superintendents echoed this sentiment.
Indiana Area School District, for example, is projected to pay $2 million on cyber charter tuition — more than what would be brought in by the potential tax increase.
School districts now pay tuition for each student who attends a cyber charter school outside the district, instead of the local public schools. That rate is different for each district, something school officials have criticized.
“If there would be reform in the cyber school cost structure that could save our school district enough that we wouldn't need to levy a tax,” Ritzert said.
State Auditor Timothy DeFoor’s office released an audit in February that urged, among other steps, that elected officials and the Department of Education change the way cyber charter schools are funded.
Democrats and Republicans in Harrisburg have pushed for changes around cyber charter schools, but there’s not yet consensus on how to do it.
For example, Armstrong School District is expecting to spend about $4.8 million this year on cyber charter tuition, said Sam Kirk, director of finance and operations. That sum pays for about 250 students.
The tuition figure has more than doubled from $1.5 million since 2019, he noted, adding that it is “probably our major struggle.”
The district’s preliminary budget for 2025-26 is about $113 million. To address mounting expenses, Kirk is proposing a 2% tax increase, which he estimates would raise roughly $680,000.
The board is scheduled to vote June 23 on the proposal. But even if it passes, the district still faces a deficit that would require cuts, including a potential cut to the library program and furloughing over a dozen teachers.
The teachers union has vehemently opposed furloughs.
But even if a tax hike and furloughs occur, the district would still face a $1 million shortfall that would require tapping the fund balance to cover, Kirk said.
Kirk also flagged another pressure point: a nearly 15% increase in health care costs, marking the second consecutive year with double-digit hikes.
The district received about $19 million in COVID-19 relief funds, which pushed the budget crisis off for a few years, Kirk said.
Now, a $17.6 million fund balance can help with some gaps, but that is not a long-term solution, he said.
“Once you start using that savings account and it’s gone, what do you have to lean back on except raising taxes a ton at that time or making drastic cuts?” he said.
After using nearly all of its fund balance before the pandemic, New Castle Area School District now faces a projected $1.7 million deficit for the coming fiscal year on a $65 million operating budget.
More than $30 million in COVID-19 relief funding “injected a huge boost into our community,” Paladina said, but those one-time dollars have nearly run dry.
Health care costs have driven spending increases as employee premiums rise, pushing annual health care spending to $7 million.
For a decade, New Castle’s millage rate has sat largely unchanged, holding steady even as neighboring districts nudged theirs upward.
Without new revenue, Paladina said the district is bracing for harder decisions down the line.
“A lot of school districts will tell you it’s irresponsible not to raise it every once in a while,” he said. “You may only have to raise taxes once every so many years, and that money, it helps.”
This story was written by Abigail Hakas and Feixu Chen.
Abigail Hakas is a reporter for Next Generation Newsroom, part of the Center for Media Innovation at Point Park University. Reach her at abigail.hakas@pointpark.edu.
Feixu Chen is an intern with Next Generation Newsroom. He is a graduate of Emerson College in Boston. Reach him at feixu.chen@pointpark.edu.
NGN is a regional news service that focuses on government and enterprise reporting in southwestern Pennsylvania. Find out more information on foundation and corporate funders here.
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