The Utah State Board of Education on Friday was told midyear counts show continuing declines in K enrollment and that uncertainty about property-tax collections leaves the states education budget facing a possible multimillion-dollar shortfall. State budget staff told the board October 1 student counts were roughly 5,000 fewer than projection models expected, with kindergarten and early grades showing the steepest drop.

The shortfall is driven by two paired effects, staff said: a multi-year decline in births (the core cause of fewer kindergarteners) and a mismatch between the legislative estimates used to set school funding and final property-tax collections used to equalize districts. Dale Frost, the boards Minimum School Program administrator, said the boards midyear calculations show the Basic School Program could finish the year with either an $8 million deficit or a $41 million deficit depending on final property-tax receipts.

"We want to be transparent about the range," Deputy Superintendent Scott Jones said. "Property-tax collections over the next month remain the biggest unknown in these projections." He said the fiscal range reflects the certified tax-roll numbers the Tax Commission produces late in the year. Staff models that use certified values in the project history track closely with what actually happens, he added.

Board members and staff discussed how the formulas "hold-harmless" and prior-year calculations affect the results. Frost explained that the funding formula protects an LEA from an immediate cut by paying the higher of the prior year or current October counts for certain elements; that protection, he said, can create near-term costs when students shift from one sector to another (for example, students who move to charter schools or alternative providers), because the state also funds growth in other sectors.

Sam Urie, the boards finance director, told the board recent changes mean some growth in special education counts that had previously been recorded with a multi-year lag are now captured more quickly, which also affected projections. He said some $5 million of the hold-harmless cost this year appears related to students in online arrangements who were counted differently than expected.

Board members asked staff for more localized analysis. Several members requested county-and-district-level projections to match the statewide picture with growth pockets, for example in parts of Utah and Wasatch counties where building permits and new housing projects show continued growth.

The board received the presentation as an information item; staff said they would finalize the midyear reconciliations after the states final property-tax roll is certified and would return with any requested breakdowns.

Ending notes: staff reminded members that the midyear findings will be part of the materials legislators review during the December executive appropriations process and that the final picture could change modestly once tax receipts are finalized.