Reporter's Guide to Pennsylvania Local Government

what you really need to know when they send you to a meeting

School Budget – Act 1

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Pennsylvania school boards – except in the cities of Philadelphia, Pittsburgh and Scranton – operate on a fiscal-year schedule that begins July 1.  They have to pass their final budgets and tax resolutions by June 30 for the upcoming school year.

The Taxpayer Relief Act enacted in 2006, commonly called “Act 1,” is intended to reduce taxes for homeowners and farmers and allow voters to control school tax increases. Act 1 introduced major changes and new deadlines into the school district budget process.

For a detailed explanation of Act 1, click here. For the text of Act 1, click here.

Act 1 allows school districts to accept state gaming revenue to offset property tax reductions which result from homestead and farmstead exclusions. Homestead and farmstead exclusions lower assessments, which result in lower property taxes, for qualifying homeowners and farmers.

School districts may also reduce property taxes by levying a personal income tax to replace their earned income tax, or by increasing their earned income tax.

Earned income tax is based on wages and salaries. Personal income tax considers additional income sources, such as investment and pension income.

Voters decide, by “back-end referendum” in the spring primary election, whether to allow their school district to raise taxes beyond the district’s “adjusted base index,” which is an inflation rate calculated for their district by the Pennsylvania Department of Education.

A school board may refuse state gaming revenues. If it does, the voters have to agree by referendum in the next primary election. If the voters disagree with the board, the question comes up for a vote again in the following fiscal year.

State gaming revenues are not guaranteed. Whatever the state takes in from gambling each year goes first to fund property tax and rent rebates for seniors and disabled Pennsylvanians, and then to school districts to offset property tax reductions.

School districts find out in May if they will get state gaming funds, and how much.  If funds are available, districts get 50 percent in August and 50 percent in October.


The basic school budget cycle under Act 1 is:

  • On Sept. 1, the Pennsylvania Department of Education publishes the “base index,” a figure based on statewide wages and inflation, for the following fiscal year.
  • By Sept. 30, PDE notifies school districts of their “adjusted base index,” which considers a district’s aid ratio in calculating how much it may raise its real estate tax rate without court, PDE, or voter approval.

If the district wants to raise taxes by more than its adjusted base index, it can ask for one of 10 exceptions allowed by Act 1 – three require approval from a Court of Common Pleas and seven require PDE approval. If a district wants to raise taxes more than its index for reasons not covered by one of the 10 exceptions, it can ask voters to approve the increase by referendum in the upcoming primary election.

  • Toward the end of January – 110 days before the next primary election — a school district seeking an exception must make its proposed preliminary budget available for public inspection. Or, districts may adopt a resolution saying they are not going to raise taxes by more than the index.
  • The preliminary budget has to be passed by mid-February – 90 days before the primary election – unless there was a resolution not to raise taxes beyond the index.
  • Early March – no later than 75 days before the primary election – is the district’s deadline to file a petition for an exception with the Court of Common Pleas, or to ask PDE for an exception.
  • Late March – or 55 days before the primary election – is the deadline for the court or  PDE to rule on the exception request.  If the request is denied, the district may appeal to voters by referendum in the upcoming primary election.
  • Late March — 50 days before the primary – is the deadline for the district to submit a referendum question for the primary election ballot.
  • Primary elections in Pennsylvania are held on the third Tuesday of May in all years except Presidential-election years, when they are held on the fourth Tuesday of April. If there is a tax-increase referendum on the ballot and voters reject it, a district cannot raise taxes more than its index.
  • By the end of May, the school board adopts a proposed final budget.
  • Around June 10 – or no less than 20 days before the board plans to vote on the final budget — the school district has to make its proposed final budget available for public inspection.
  • Around June 20 – or no less than 10 days before the vote — the school district has to advertise its intention to adopt the final budget.
  • The final deadline is June 30. The school board votes to adopt the budget, then votes to adopt an appropriation plan to pay for the budget.
  • The adopted budget has to be submitted to PDE within 15 days.


Under Act 1, voters also have to approve a school district’s referendum to levy any new type of tax.

The Public School Code allows school boards to increase spending after a budget is passed “to meet emergencies, such as epidemics, floods, fires, or other catastrophes, or to provide for the payment for rental under leases or contracts to lease from the State Public School Building Authority or any municipal authority entered into subsequent to the date of the adoption of the budget.” In such cases, additional funds can come from other budget categories, from “unappropriated revenue, if any,” or, by a 2/3 vote of the board, from a temporary loan.

The board is allowed to move unspent revenue from one budget item to another, but only during the last nine months of the fiscal year (October through June).

For more information, go to the “Links” page of this website and scroll down to publications from the Pennsylvania Department of Education and publications on taxes.


Written by pareporter

June 13, 2010 at 11:19 pm

One Response

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