DALLAS TWP. — After being stalled by weeks of debate over a daunting, multi-million-dollar deficit and another potential round of steep tax hikes, the Dallas School District finally has a final budget.

The Dallas school board voted 6-2 on Monday night to adopt its budget for the 2026-27 school year. The budget increases annual district revenue 16.25% to $53.37 million; and features a 21.64% increase in total expenditures to $53.32 million, resulting in a slight surplus of $44,120.

As part of the budget, the school board is raising property taxes 3.1% to $15.4529 per $1,000 of assessed value. The owners of the median property in the district, which has an assessment of $169,700, will have their annual school taxes rise $79 to $2,622.

This is the third consecutive year in which taxes have risen in the district, following a 4.8% tax hike the school board imposed last year and a 4.9% hike it imposed in the 2024-25 school year — making the cumulative three-year tax hike 13.34%. Given a constant assessment, the owners of the median home for the 2026-27 school year have had the annual taxes they pay to the district rise $309. This increase follows a five-year period in which time the school board did not raise taxes at all.

School board members Kristin Pitarra and Sherri Newell cast the two votes against the budget Monday. Pitarra, who cast the deciding vote in favor of the budget last year and pledged then not to vote for another tax hike, declined to comment.

Newell argued the tax hike put too great a strain on residents and said the district needed to continue cutting costs.

“I just don’t want to burden the taxpayers with another increase,” Newell said after the meeting Monday.

Homeowners and farm owners can seek relief from this higher tax bill through the homestead exclusion — a property tax break generally funded through state gambling tax revenue. The district is receiving $611,477 of state homestead-exclusion funds, which will afford homeowners a tax break of $111 — just more than the $110 saved last year.

The district’s total ratable tax base is set to appreciate 2.8% to $1.72 billion and the tax-collection rate is expected to increase from 96.5% to 97%. Under these conditions, the new 15.4529 millage is expected to generate $25.25 million. Total local revenue — a sum that includes property tax and other local revenue sources, is budgeted at $31.81 million, or 59.61% of total district funding. This total revenue figure notably includes $4.5 million of “other financing sources.”

The revenue the district raises through serial tax increases will contribute  to an effort to counteract alarming deficits that have put the district deep in the red. According to the 2026-27 budget, the district is estimated to start the 2026-27 school year with a negative fund balance of $5.5 million; and end the year, given the projected $44,120 surplus, with a negative fund balance of $5.46 million. (Because Dallas, like several school districts in the Wyoming Valley, has not yet received its 2024-25 audit, district officials have cautioned that it has not been able to fully ascertain its true balance.)

Officials have attributed the district’s negative fund balance largely to healthcare. Business Manager Lyndsey Dalton indicated in May that healthcare costs have increased 73.87% over the last five years and had been set to eclipse $7.05 million this school year. She said the school district had habitually accepted projections about these healthcare costs that were too optimistic, helping create its current deficit.

There is also a significant one-year increase in expenses that appears to be the result of increased budgeted debt service. A year after a refinancing of district debt forestalled payments and dropped the annual debt-service payments to just $150,000, the cost of debt service and other expenditures and financing uses have increased this year to $9.98 million.

A Fraught Budget Season

Pressures from these costs and the district’s enduring  fund-balance deficit made the  budget-planning process fraught.

On May 11, the board tabled an initial proposed budget the district administration had recommended that called for a 4.1% tax increase — the maximum increase allowable for Dallas under the state Act 1 Index.

The school board then voted 7-2 on May 26 to reject a proposed budget with the current 3.1% tax increase. Some board members said they were uncomfortable with a budget that failed to adhere to the administration’s initial recommendation and forewent hundreds of thousands of dollars of revenue that could go towards closing the district’s fund-balance deficit. The listed tax base and tax-collection rate imply the school board’s choice to lower its tax hike from 4.1% to 3.1% cost the district $250,664 in revenue this school year.

To meet that state deadline for the proposed budget, which is at the  end of May, the board members put aside their reservations and voted 6-3 to introduce the proposed budget with a 3.1% tax hike on May 29. The final budget with the 3.1% tax increase considered Monday, which school officials said was identical to the May 29 proposal, was adopted without incident.

‘Moving Parts’

The district has taken a number of cost-saving measures to right its finances.

Superintendent Thomas Duffy said after the meeting Monday that the district was still in negotiations with both its teachers union and support-staff union, whose current contracts are set to expire over the summer. He has previously indicated that the result of those negotiations could alter healthcare benefits.

In addition, Duffy said the district would continue to pursue other cost savings as well as additional state and federal grants.

“Every budget is a forecast,” Duffy said. “One of the things we’re excited about, motivated about, is the opportunity to work towards some of the efficiencies that this budget calls for….We have a couple moving parts around.”