Completing East Penn’s $95 million renovation and expansion work on Eyer and Lower Macungie middle schools will require tax increases and additional borrowing, financial plans presented Monday show.
Construction costs for the district’s realignment plan are estimated at nearly $29.2 million for Eyer Middle School, which would house fifth and sixth graders, and more than $50.2 million for Lower Macungie Middle School, which would serve seventh and eighth grades.
Soft costs, such as furniture and technology equipment, as well as additional project costs, such as permitting and site studies, raise the project cost to nearly $94.8 million.
In answer to board concerns about the potential impact of tariffs, CHA Consulting project manager Mike Sander said contingencies will be built into the project plan, but it is difficult to know what those impacts could be.
“It is a giant unknown that we are addressing,” Sander said.
Executing the $95 million middle school project without changes to the district’s financial strategy would cause the district to run out of money by 2031, district projections show.
To avoid that outcome, East Penn board members considered financial plans from PFM Financial Advisors and Raymond James that would reduce planned annual transfers from the district’s capital fund and cut spending on new staff for the reconfigured buildings.
One suggested strategy would rely on borrowing instead of cash transfers and cut the yearly capital spend from $8 million to $6.5 million. It would also reduce the 2030 cost of new staff from $6.3 million to $3.4 million.
Staffing positions that could be cut without compromising the integrity of academic programs include foregoing the addition of student advisers in the 5-6 building, Superintendent Kristen Campbell said.
The board would need to raise real estate taxes to the state’s Act 1 index every year for the foreseeable future to execute the suggested financial strategy, the financial plan shows. An average homeowner with an assessed value of $215,749 would see an annual real estate tax increase of between $156 and $170.
The district’s 2025-26 budget, passed Monday, includes such an increase, raising real estate taxes 4%.
Those maximum tax increases, along with the other suggested cost-saving steps, would leave the district with a projected $35.9 million fund balance in 2031, or 15% of total revenues. The projected fund balance for the 2025-26 budget is at $34.7 million, or 18% of total revenues.
The financial plan presentation includes alternate paths, including raising real estate taxes to 75% of the Act 1 index each year, which is projected to leave the district with only $18.6 million, or 8% of total revenues, in fund balance by 2031.
Board members were divided on the best path forward.
Eight years of tax raises to support middle school construction could generate a community backlash that would prevent needed work at the high school, board member Alisa Bowman said.
“This to me feels financially reckless,” Bowman said, noting that the district’s 2025-26 budget includes a $1.2 million deficit for planned technology investments.
While acknowledging the difficulty of completing middle school construction while also being able to address the needs of the high school, board member Timothy Kelly said he trusts projections that the district’s greatest needs are in K-8.
“We need to be focused on fixing this for the district and for our kids,” Kelly said.
Elementary buildings are facing immediate capacity issues, Campbell said, emphasizing that K-8 shifts remain the priority while the district aims to also address high school needs.
“This is a plan that supports and is able to make the K-8 realignment happen,” Campbell said.
The board will take action on the schematic design and the financial plan for the middle school project at a future meeting. That action is tentatively scheduled for June 23.
See below for the financial plan presentation from Monday’s East Penn board meeting:
