School District of Lancaster leaders presented an overview of the School District of Lancaster’s financial outlook during a Community Budget Forum on April 7, outlining the factors contributing to ongoing deficits and the need for corrective action.
Officials explained that the district is facing a structural deficit, meaning that ongoing expenses are growing faster than recurring revenues. While the district maintained mostly balanced budgets through 2020, expenses have exceeded revenues every year since 2021—a trend that accelerated after temporary federal COVID‑19 relief funds expired.
Enrollment Decline and Evolving Student Needs
The district’s enrollment has declined by nearly 13 percent since 2017, with additional decreases projected in the coming years. Leaders noted that this decline is equivalent to the loss of approximately three elementary schools’ worth of students.
At the same time, the number of students requiring special education services has increased by about 15 percent. These services are legally required and more resource‑intensive, limiting how quickly staffing levels can be reduced. District leaders emphasized that reductions to date have focused primarily on administrative positions, which account for a small share of total staff.
Key Cost Pressures
Several spending areas continue to drive budget growth, including:
- Special education, with costs up more than 30 percent over the past five years;
- Employee salaries and benefits, which make up about 70 percent of district expenditures;
- Healthcare, with district costs rising roughly 65 percent since 2020;
- Charter school tuition, which has increased approximately 60 percent since 2020; and
- Utilities and maintenance, particularly electricity.
Overall, district expenses have grown by just over 4 percent per year on average.
Revenue Limits
On the revenue side, leaders highlighted that the district has limited flexibility. About 55 percent of funding comes from the state, and local property taxes—roughly 38 percent of revenue—are the only source directly controlled by the school board.
The district’s tax base grows slowly due to limited available land and a high concentration of tax‑exempt properties, including colleges, hospitals, and government facilities. While state funding has increased in recent years, it has not fully kept pace with rising costs.
Looking Ahead
To cover recent deficits, the district has drawn down its reserves, which are now depleted. Without changes, projected shortfalls could grow substantially over the next several years.
District leaders outlined a multi‑year strategy to restore financial stability, including required investments, priority spending, and potential reductions. While acknowledging that some adjustments will be difficult, leaders stressed the importance of taking action now to protect the district’s long‑term ability to serve students.
More information and a full list of recommended budget adjustments is available on the District’s Budget Planning Hub.