Elkhorn Area School District presents budget with $1.4M shortfall, proposes 8% tax-levy increase and staff reductions

Elkhorn Area School District on Tuesday presented a proposed 2024'25 budget that would increase the district's tax levy by about 8% and relies on a package of program transfers and staff reductions to cover an estimated $1.4 million revenue'expense shortfall.

The presentation was led by the district's new director of business finance, Mister Earl, at the district's annual budget hearing. Mister Earl summarized enrollment, revenue sources and planned budget changes and said the district's post-levy figure is $24,754,415, which he described as representing an 8% increase in the tax levy.

Why it matters: District officials said state funding changes and local enrollment patterns are the primary drivers of the shortfall. Officials noted the district's equalized property valuation has increased while in-district enrollment has declined; at the same time the state adjusted the revenue cap and special education aid but did not increase state equalization aid enough to offset the district's needs.

Mister Earl said the district's enrollment is roughly 3,633 students, of which about 800 are open-enrollment students who live outside the district. "Our actual student enrollment has increased every year up until about 02/2020, and we've hit a slight plateau," he said. He added that open-enrollment transfers are a major revenue source and that the state increased the open-enrollment transfer amount to $10,102.

Key budget details and proposed changes - Revenues: officials said last year about 36% of revenues came from the local tax levy and 34% from state equalization aid; other state aids, open-enrollment revenue and a small federal share make up the remainder. - Expenditures: roughly 75% of district expenditures are personnel costs. "About 75% of our expenditures are personnel," Mister Earl said. - Shortfall: the presentation listed a total revenue'expense shortfall of about $1,400,000. - Proposed savings and reductions: the administration proposed reducing two transportation routes, reorganizing custodial services, cutting five instructional days, transferring multiple programs to the community service fund (Fund 80), reducing seven elementary staff positions, reducing four middle-school staff positions (including two study-hall aides and one office staff position), and reducing three high-school staff positions and some overloads. - Investments and additions: the draft budget includes a part-time sign-language services position, two additional special-education teachers, one English Learner teacher, two teacher positions and one counselor for the district's virtual charter program, and adoption of the Act 28 reading program. - Cost drivers: the draft assumes a 3% cost-of-living salary adjustment for all employees, a 2% increase in student transportation costs, a projected 6% increase in health insurance, and a 3% rise in general and special-education fund expenditures.

Officials explained the effect of state budget changes: the state allowed a $325 increase in the per-student revenue cap; per-pupil state aid remained at $742 per student; special-education state aid was projected to cover roughly 42% of special-education costs (up from about 30% previously). Because equalization aid did not increase commensurately, Mister Earl said the district expects that local taxes will need to cover much of the difference.

Board and staff discussion focused on enrollment accounting and comparative metrics. District staff explained that some state reports calculate per-pupil spending using total revenue divided by resident students in a way that includes open-enrollment revenue; the staff said to compare per-pupil spending accurately the district's open-enrollment students should be added back into the resident count (about 800 students), which affects how Elkhorn compares to peer districts on page 15 of the annual report.

The presentation referenced the district's three outstanding bond issues (issued in 2015, 2016 and 2020), a long-term steady increase in equalized property valuation, and a historically low tax rate per $1,000 of equalized value in recent decades.

Next steps: the presentation served as the formal annual budget hearing. Board members asked questions during the meeting; staff identified specific program transfers and position reductions that would be included in the formal budget document. No final vote on the full budget was recorded during the hearing segment that covered the presentation; subsequent agenda items contained separate motions related to levying the general property tax.

Ending: District officials encouraged residents to review the district's 2024'25 annual report for additional details, including the budget overview and the page-by-page comparative charts referenced during the presentation.