District projects structural budget gap; health insurance and enrollment trends cited as major pressures

Howard County Public School System staff presented a fiscal outlook for FY 2027 at the Board of Education meeting on Sept. 25 that projected structural budget shortfalls unless new recurring revenue or program reductions are identified.

What staff presented: Darren Conforti, executive director of budget, said recent budgets have required reallocations and cuts because expenditure growth — driven by Blueprint for Maryland’s Future implementation, pandemic-era changes and increased costs in special education and transportation — has outpaced revenue. The operating budget grew from about $862 million in FY 2019 to roughly $1.2 billion in FY 2026, Conforti said, a 41% increase over eight years.

Key cost drivers and projections: Conforti highlighted several pressures: implementation of the Blueprint for Maryland’s Future, which phased in across years and raised compensation and program costs; pandemic-driven labor and contract pressures that increased contracted services and transportation costs; higher nonpublic placement costs; and sustained enrollment declines since 2019 that reduce per-pupil state funding. The district’s actuary projected health insurance costs could rise more than 19% in FY 2027, which staff estimated could add more than $30 million to expenditures. Conforti also said the district’s ratified contract with HCEA is preliminarily estimated to cost about $27 million for FY 2027.

Projected budget gaps and scenarios: Using a set of four planning scenarios, staff presented possible FY 2027 budget gaps ranging from roughly $45.4 million (scenario A) to $75.4 million (scenario D), with the largest scenario approximating FY 2026’s growth. The outlook assumes continued enrollment declines; staff used enrollment projections (finalized with the Sept. 30 count) to model state formula and county maintenance-of-effort (MOE) impacts. Conforti said a preliminary starting point for FY 2027 showed a small positive position of roughly $4.6 million after one-time adjustments, but that known pressures (health insurance and negotiated compensation) would far exceed that amount.

County partnership and funding: Conforti said the county provided a historically large above-MOE contribution in FY 2026 but that county fiscal capacity is limited; the Spending Affordability Committee’s projection furnished as context suggested the county might have about $55 million of new recurring revenue available for all county services, which staff said could be insufficient to cover the largest modeled gap. Staff urged early collaboration with the county executive and county council on above-MOE funding and described ongoing internal prioritization to find savings, efficiencies and potential reallocation of services.

Next steps and calendar: cabinet-level work and department-level planning will continue through October and November; the superintendent’s proposed FY 2027 budget will be presented to the board on Jan. 8, 2026. Staff offered to hold office hours and meetings with board members and to bring more detailed scenarios and trade-offs to forthcoming sessions.

Ending: Conforti said the outlook is a planning tool and not a final forecast and urged that multiple strategies — revenue, reallocation, efficiency and program prioritization — will be required to produce a balanced FY 2027 budget.