ADAMS TWP — Mars Area School District officials met Tuesday night in a public finance meeting to discuss district finances.

The meeting was scheduled a week after the district discussed a $1.4 million deficit it expects to face this year due solely to the number of district students who have enrolled in cyber charter schools as a response to the pandemic.

More than 200 students have withdrawn from Mars Area to attend cyber charter school so far this year. Jill Swaney, district business manager, said Tuesday night that the resulting deficit is looking a little more like $1.3 million.

The pandemic cyber explosion is expected to be an issue for many districts in Pennsylvania.

“It's unfunded, and it is a mandate,” Swaney said. “This issue is going to be in the papers and discussed repeatedly.”

In Pennsylvania, families can choose to send their children to charter schools paid for by the district in which they live.

In the past, the state funded as much as 40% of that tuition cost. Now, each district is responsible for covering all of that cost and is charged a tuition relative to its cost of regular district operations.

For Mars Area, the cost of sending a regular education student to a cyber charter school is about $10,402. Sending a special education student to cyber charter school costs about $22,618.

Swaney said because Mars Area keeps its cost low per student for daily attendance, its cyber charter school tuition is much lower than it could be.

Excluding the charter school deficit, Swaney expects the district will break even in the 2020-21 budget. The budget was passed with a $1.9 million deficit, which should be made up after looking at this year's revenues and expenditures.

“There's no alarming line item in either,” Swaney said. “Except for cyber charter school tuition.”

The 2019-20 budget also ended well, according to Swaney.

“We ended the year with a positive operation of around $500,000,” Swaney said. “Which was phenomenal.”

As required by the state, the district still paid every employee employed as of March 100% of their salary, regardless of their work status during the pandemic. The district also was able to maintain its revenues within $100,000.

Additionally, 2019-20 expenses added up to $49.6 million instead of the budgeted $52.2 million.

Swaney said transportation and contracts with substitutes and paraprofessionals were the biggest savings due to the circumstances caused by the pandemic.

“We only transported 117 days last year,” Swaney said.

Swaney said while the $500,000 from the 2019-20 budget is sitting in district accounts, she anticipates it filling in financial shortfalls moving forward.

Swaney said she's working on an early draft of the 2021-22 budget to give the district an idea of what it will face down the road.

“Historically, we pass a deficit budget,” Swaney said. “But not $3.2 million.”

Allowing for an increase in real estate and earned income taxes due to new housing next year, Swaney hopes for a normal increase of $1.2 million in tax revenues.

Raising millage to the index next year could possibly generate as much as $845,000, bringing a possible $3.2 million deficit next year down to about $2.355 million. Swaney said ideally, the district would trim an additional $700,000 off of that.

“That is staffing,” Swaney said. “I wish I could bring you more options.”

The district could also re-evaluate large programming when looking to cut the deficit.

Charter tuition stops as soon as a student returns to regular schooling. Swaney said, hopefully, Mars Area students will return to the district by the end of the school year.

The district keeps a fund balance of about 8%, according to Swaney. She said that will help the district deal with the deficit this year, but isn't sustainable long-term.

Swaney said the next step for the district is determining if it wants to pursue the process of raising taxes past the index for next year.

Ultimately, Swaney said charter education needs to be reassessed at the state level.

“Something needs to be done with cyber charter school tuition,” Swaney said.