BETHLEHEM — Despite adopting it 6-to-1, the Bethlehem Board of Education has some concerns over the district’s 2025-26 budget, which will be subject to a public hearing on May 7 ahead of the district-wide vote on May 20. 

The $116.6 million budget would raise the property-tax levy by 1.12 percent, which is at the limit set by the state, beyond which a budget would need approval by over 60 percent of voters. 

Board member Ewan McNay, who cast the sole vote against the budget at the board’s April 2 meeting, had unsuccessfully proposed raising the increase to 2 percent so that the district would be less reliant on its fund balance — a concern that several other board members shared.

“By spending it now, you actually give yourself less breathing room next year because you haven’t got that extra cushion,” McNay argued. 

He speculated that voters may be more comfortable with consistent moderate increases to the tax levy, rather than a relatively small increase followed by a much larger one. 

Board member Katherine Nadeau chimed in to say, “By moving forward with this budget with the 1.1 percent [increase], to a certain extent — barring other larger, unforeseen changes — we’re putting ourselves on a path to a reduced budget next year as well.” 

She agreed with McNay’s point about aiming for a more consistent approach, saying that the “past several months” have reminded her “how much I value boring governments that predictably lay out budgets.” 

The adopted budget pulls $715,241 from the district’s fund balance and reserves, though roughly $600,000 of that comes from a higher-than-anticipated payment-in-lieu-of-taxes, or PILOT, from the Public Service Enterprise Group, a publicly traded energy company. 

Chief Business and Financial Officer John McPhillips pointed out that, at the beginning of the budget process in November, there was a much larger anticipated levy increase — “you may recall we were looking at 5.7 [to] 5.9 percent,” he said — as the district was preparing for a loss of that same PILOT before it was extended for another year as negotiations with the town’s industrial development agency continue. 

The state allows a school district to keep 4 percent of the following year’s budget in its undesignated fund balance. The district had around $4.6 million in its fund balance as of last June, which would not include the surprise $600,000 from the PILOT. 

Board Vice President Meredith Moriarty advised McPhillips that, while she herself was comfortable with the budget as proposed, “none of us feel comfortable continuously going into this fund balance knowing we can probably only do it for three years.” She said looping the board in as soon as possible during the next budget cycle would make it easier to go past the tax cap, if need be. 

“We are open to that possibility,” she said. 

The allowable tax levy for schools changes each year depending on its specific circumstances, making exact projections difficult, but McPhillips said a 2-percent increase limit would be a “safe” expectation for future budgets. 

Under the 1.1-percent tax-levy increase, the current tax rate of $22.27 per $1,000 in assessed property value for Bethlehem residents would rise to $22.57, while the rate of $22.59 for New Scotland residents would drop to $22.22. 

Overall, it’s an $820,000 increase for the district, for a total levy of roughly $74 million. 

Budget overview

The $116.6 million 2025-26 budget is 2.3 percent larger than the current school year’s $114 million budget.  

Like other districts, Bethlehem is dealing with rising costs across multiple domains, particularly health insurance. 

Medical and pharmaceutical insurance premiums, McPhillips said, “are growing at a pace that not only exceeds inflation but, given some of the increases in pharmaceuticals in general, are even outpacing the medical-inflation index.” 

The district’s $33.4 million state-aid package increased 3 percent, to $34.6 million, primarily through building and transportation aid. However, these numbers are not solid until the state adopts its own budget. 

After the public hearing on May 7, district residents will be able to vote on the 2025-26 budget on May 20 at the high school gym from 7 a.m. to 9 p.m.. 

Also on the ballot will be an $814,770 proposition for the purchase of three large diesel buses and three smaller gasoline ones. McPhillips predicted the state would reimburse around 66 percent of the cost. 

There will also be a proposition to establish a capital reserve fund with a balance limit of $30,000,000 for a “probable” 10-year period. 

Voters will also approve the Bethlehem Public Library’s operating budget, and fill two board of education seats along with two library trustee seats.