Cheltenham SD posts $1.5 million surplus but staff warns reliance on interest income masks structural gap

Cheltenham School District finance staff reported the district finished fiscal 2024–25 with $1.5 million in excess revenues over expenditures, but cautioned the surplus depends heavily on about $3 million in interest earnings and the one-time effects of expiring federal grants.

Mr. Swagger, a district staff member presenting interim and year-end results, said the district’s total expenditures grew to about $138 million in 2024–25 from roughly $131 million the prior year while revenues grew by about $1.6 million. “Interest income makes up $3,000,000 of our annual budget,” Mr. Swagger said. He also noted the expiration of ESSER funding in September 2024 reduced federal revenues for 2025.

The nut graf: the gap between revenue growth and expenditure growth — driven in part by rising special-education placement costs and salary/benefit increases — is narrowing the district’s cushion and could force choices during next year’s budget process.

Key figures presented by staff include an approximate $2.0 million year-over-year increase in local-source revenue and an additional $2.0 million increase in state-source revenue in recent years, the expiration of ESSER funds, and an approximately $2.2 million increase in special-education tuition placements through the end of the year. Mr. Swagger summarized: “Total expenditures of 138,000,000 versus 131,000,000 — that is approximately a $6,000,000 growth year over year versus ... a $1,600,000 revenue growth.”

Board members pressed staff on the sustainability of using interest earnings to balance operations. Charles Reneau Williams, president, asked whether federal funds were being held until the state passes a budget; Mr. Swagger replied, “They administer. They’re not moving for their coffers yet,” explaining the state’s budgeting status can delay distribution of federal and state-administered dollars.

Staff said the district ended the year with an unrestricted general-fund balance that rose from about $26 million to nearly $29 million, and that excess operating revenues are typically transferred into the capital-reserve fund for future projects. Members noted that, without the current level of investment income, the district would be much closer to a structural deficit and asked staff to highlight that risk for the upcoming budget deliberations.

Looking ahead, staff said they will include these trends in the 2025–26 budget planning and the Act 1 timeline that begins in September. The committee did not take any formal budget votes; it received the presentation and asked staff to continue monitoring revenue assumptions and the impact of special-education placements.

The committee approved meeting minutes and then continued with other agenda items.