Budget planning for a sustainable future
Like many school districts across Pennsylvania, we are facing declining enrollment and rising costs that are growing faster than revenues. These factors have created a structural imbalance that requires thoughtful, sometimes difficult decisions.
This Budget Information Hub brings together background, data, timelines, and opportunities for community input in one place. We will continue to update this site throughout the budget process.
The district’s current budget challenge is not the result of a single decision or a single year. It reflects a long‑term structural imbalance between how much it costs to operate the district and how much revenue we receive.
On average, district expenses have been increasing by about 6% per year, driven by factors such as employee benefits, special education services, transportation, and utilities. At the same time, our primary local revenue source—property taxes—grows by less than 1% annually unless tax rates are increased.
Compounding this challenge is the nature of our local tax base. A significant portion of property in the community is tax‑exempt, including hospitals, colleges, churches, and major economic development projects. While these assets provide important benefits, they do not contribute to property tax revenue that supports schools.
Over time, this gap between steadily rising costs and limited revenue growth has widened, creating the financial pressure we must now address.
Declining Enrollment
The district’s overall enrollment is declining, down more than 10% since 2017. These nearly 1,400 students represent the equivalent of about three average SDoL elementary schools. It’s projected to decline further, to 8,500 students by 2035.
At the same time, the district’s staff–which includes teachers, specialists, support staff and administrators–has grown by more than 7% since 2020. This disproportionately low student:staff ratio puts enormous strain on the district’s budget.
Why Costs Are Rising as Enrollment Declines
While the district’s overall enrollment has declined by more than 10 percent since 2017, the cost of operating our schools has continued to rise. This is not the result of a single decision or a single year, but the interaction of several long term trends.
Most importantly, the needs of our students have changed. The number of students requiring special education and English Language Development services has grown steadily, even as total enrollment has declined. These services are legally required and more resource intensive, limiting how quickly staffing levels can be reduced without affecting student support or compliance.
At the same time, several major cost drivers have accelerated. Employee healthcare costs have risen sharply since the pandemic, charter school tuition payments have increased as district per student costs rise, and utilities and other operating expenses continue to be affected by inflation. Together, these pressures have pushed expenses upward, even as the number of students we serve has fallen.
Addressing past overspending
The district has overspent its budget every year since 2021. To pay for these annual deficits, the district has drawn down its unassigned fund balance, or savings account, from a high of $30.6 million in 2020 to a negative $9.6 million at the beginning of this year.
It is important to understand how these issues relate. Our structural imbalance is the underlying issue that has contributed to overspending over the past several years, compounded by admittedly poor financial projections during the most recent fiscal year. The district is actively addressing last year’s overspending through one-time corrective actions such as spending freezes, debt refinancing, and stronger financial controls. Those steps are already in place.
However, the budget decisions being considered for future years are focused on addressing that underlying structural imbalance, not simply reacting to a single year’s financial outcome.
What’s Driving the Deficit Now
The district’s current financial challenge reflects a structural imbalance between ongoing expenses and recurring revenues—a gap that has widened in recent years.
Several factors are converging at once. Healthcare costs for employees have increased substantially, and because the district is self insured, higher claims directly affect the budget. Special education costs continue to rise as student needs grow, and charter school tuition payments increase because they are based on the district’s own per pupil costs rather than the costs incurred by charter schools.
The end of temporary federal COVID relief funds has also exposed this imbalance. Those one time dollars helped the district maintain staffing levels, protect class sizes, and cover deficits during and after the pandemic. While those funds supported students and stability, they did not change the underlying cost structure—and they are no longer available.
At the same time, the district’s ability to raise new revenue remains limited. Local property taxes grow slowly without rate increases, and a large portion of property within the district is tax exempt. Although state funding has increased in recent years, it has not grown at the pace or scale needed to fully offset rising costs.
Without adjustments, the district's deficit and negative fund balance will continue to grow. That is why the administration is proposing action now to prevent further fiscal stress.
Spending by the numbers
For illustration purposes, these numbers track the flow of a $282.6 million budget for the School District of Lancaster. They illustrate how the vast majority of district funds–more than 92%–would be immediately diverted into four areas of mandated or otherwise fixed expenditures, the largest of which is salaries and benefits for staff.
The last area, considered “all other” operational expenses, is the area where the district has the largest amount of discretion. This area includes things like all classroom materials, technology, student transportation, before- and after-school programming, and field trips.
Note, this is for illustration only. The final budget amounts will be determined by the board.
$202.9m
Salaries and benefits
$24.1m
Debt service
$17.3m
Charter, cyber, and other tuition payments
$15.8m
Utilities and maintenance of buildings and grounds
$22.5m
All remaining district expenses
District leaders recently shared an overview of the School District of Lancaster’s financial outlook at a Community Budget Forum, explaining the long‑term challenges facing the district and the steps being considered to restore financial stability.
Review the full list of proposed budget adjustments at the link below.
The documents below show how the district’s budgets have evolved in recent years as enrollment, costs, and revenues have changed. Annual budgets reflect financial assumptions made at a specific point in time. As enrollment, service needs, and economic conditions change, actual costs may differ from initial projections. These documents are provided for transparency and context.
Updates
This section includes key documents and updates related to the district’s budget planning. Materials are added as they become available.
April 2, 2026
School District of Lancaster releases financial review
The School District of Lancaster released an independent review of a recent budget projection error along with an analysis of the district’s broader financial challenges. District leaders say the report provides important clarity and will help guide next steps.
The review found the district relied too heavily on a single software projection tool without enough cross-checks against actual spending data. It also noted that while finance staff are skilled, the department is currently operating without two key positions, limiting its ability to conduct deeper analysis and respond quickly to changing conditions. The report recommends stronger internal processes, clearer coordination between departments, and regular validation of budget projections.
“The projection error did not create the district’s financial challenges, but it may have delayed action by creating the impression there was more time to respond,” said Dr. Timothy Shrom of the Pennsylvania Association of School Business Officials (PASBO), who led the review.
“This report gives us a clear and honest look at where we are,” said Superintendent Dr. Keith Miles. “We have already begun strengthening our financial processes and internal coordination, as well as reviewing the leadership and staffing model in our finance department. At the same time, we must address the larger, ongoing challenges facing our district in a thoughtful and responsible way.”
The report confirms that since the 2020–2021 school year, district spending has outpaced revenue. Like many districts, Lancaster used one-time federal ESSER funds to support programs and staffing. Those funds expired at the same time growth of the district’s local revenues slowed.
The report also notes that the district has limited ability to quickly increase revenue, as only about 25% of its budget comes from local property taxes, which are subject to state limits. While state funding has increased in recent years, future growth is uncertain.
“The path forward will require difficult but necessary decisions,” said School Board President Jennifer Eaton. “We must take responsible action now to ensure the long-term financial stability of our district and protect our ability to serve students in the years ahead.”
District leaders emphasized that addressing these challenges will require ongoing evaluation of spending, staffing, and revenue, with adjustments made each year.
The district will host a Community Budget Forum on April 7, where the report’s authors will present their findings to the Board of School Directors. At that meeting, the district will also unveil its proposed budget for the 2026–2027 school year.
March 25, 2026
Dear SDoL families,
I am writing to share an update following last night’s School Board meeting and to invite you to continue participating in the district’s budget planning process.
At the meeting, the School Board unanimously approved a resolution of intent related to potential furlough authority, as required under Pennsylvania law. This resolution allows the district to consider furloughs if they become necessary during the budget process due to declining enrollment and ongoing financial pressures. The resolution is a procedural step—it does not implement furloughs, and no final decisions have been made about staffing or programs.
The next step in this process is to share strategies to begin closing our structural deficit for the board to consider at a Community Budget Forum on April 7. During this meeting, families and community members are invited to:
- Learn more about the district’s financial challenges,
- Hear how recent financial issues are a symptom of a deeper, long‑term budget imbalance the district is now working to address,
- Review budget options under consideration, including reductions and investments, and
- Talk directly and share suggestions with district leaders and subject‑matter experts.
At the same time, we are working on building a new section of our website that will collect past budget information in one easy-to-find place, as well as all updates and information on the current budget process, including strategies to address our structural deficit when they are announced.
We recognize that budget discussions can be concerning, especially when they involve staffing and programs that support students. The board and administration remain committed to being transparent about the challenges we face and engaging the community throughout the budget process.
Thank you for your continued support of our schools. We will continue to share updates as the process moves forward.
Sincerely,
Keith Miles Jr.
Superintendent of Schools
School District of Lancaster
March 20, 2026
Dear SDoL Families,
We are writing to share important information about ongoing budget discussions in our district and to provide clarity about what has been shared publicly and in recent media coverage.
On Tuesday evening, the School Board discussed a proposed resolution that would allow the district to consider staff reductions, if necessary, during this budget cycle due to declining student enrollment and financial pressures affecting school districts across Pennsylvania. After discussion, the Board voted to table the resolution and will continue the conversation at a special meeting on March 24 at 6:30 p.m.
We know that news reports and online discussions have raised concerns, and we want to be transparent and thorough in explaining our situation and our approach.
Understanding the Budget Challenge
Our district, like many others, is facing a long-term budget challengecaused by two key factors:
- Declining student enrollment, and
- Costs that continue to increase faster than revenues.
Over time, this imbalance has created a structural deficit, meaning that, even with responsible budgeting, our current model is not sustainable. On average, our expenses increase by about 6% each year, driven by driven by factors largely outside the district’s control, including employee benefits, special education services, transportation, utilities, and contractual obligations. At the same time, our primary local revenue source—property taxes—grows by less than one percent annually unless the district raises tax rates.
Federal COVID relief funds gave us a reprieve from this reality, but those funds are gone. This long-standing challenge is what is driving the difficult budget conversations now underway.
Some coverage has connected this year’s budget planning to last year’s overspending. While we take that issue seriously, it is important to understand how these issues relate. Our structural imbalance is the underlying issue that has contributed to overspending over the past several years, compounded by admittedly poor financial projections during the most recent fiscal year. The district is actively addressing last year’s overspending through one-time corrective actions such as spending freezes, debt refinancing, and stronger financial controls. Those steps are already in place.
However, the budget decisions being considered for future years are focused on addressing that underlying structural imbalance, not simply reacting to a single year’s financial outcome.
How Decisions Will Be Made
No final budget decisions have been made. Over the next few months, the district will present budget options for Board consideration that include:
- Proposed reductions and cost savings,
- Required and recommended investments, and
- An explanation of the tradeoffs involved in each option.
To support transparency and accountability, the district has engaged independent financial professionals who are reviewing our business and financial operations. Their findings will help guide both immediate improvements and long-term planning.
We invite you to attend our Community Budget Forum, which is scheduled for April 7, where families and community members will have an opportunity to:
- Learn more about the district’s financial situation,
- Understand the budget options under consideration, and
- Ask questions and share feedback before decisions are made.
We encourage families to participate in that conversation.
Our Commitment
We recognize how unsettling budget discussions can be, especially when they involve staffing and programs that matter deeply to students and families. We are committed to transparency about our challenges and choices, communicating clearly and regularly as the budget process continues.
Thank you for your continued engagement and support of our schools.
Sincerely,
Keith Miles Jr.
Superintendent of Schools
School District of Lancaster
February 10, 2026
Additional Documents
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Multi-Year Budget Strategy
A blueprint for bringing the district to structural balance, presented to the school board February 10, 2026.
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Deficit Mitigation Strategy & Financial Recovery Plan
An overview of tactics to address the district's budget deficit from the 2024-2025 school year, presented to the school board on February 24, 2026
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Annual Comprehensive Financial Reports
An archive of Annual Comprehensive Financial Reports dating back to 2019.