Okemos superintendent to recommend budget reductions after $1.2M revenue shortfall; district to seek input and offer voluntary severance

Superintendent Hood told the Okemos Public Schools Board of Education the district opened the year projecting a deficit and now faces a decrease in general fund revenue of about $1.2 million that, together with rising insurance and special-education cost pressures, will require reduction strategies to balance the 2025-26 budget.

Hood said administrators have been reviewing district accounts, subscriptions and staffing to identify savings and revenue opportunities and that a recommended list of possible reductions will be included in the board packet to be released Thursday after 5 p.m. "We will be providing an update to our community... and what's new that we'll be sharing is the improvement in our projections, but still the need to provide budget reductions for the board's consideration to make sure the district is healthy financially moving forward," Hood said.

Process and staff communications: Hood said building and department leaders are meeting with staff members who may be affected so employees hear potential changes from their supervisors first. He said the administration is taking care to weigh every option and to avoid surprises to staff: "The options that we've considered were weighed with great, great care," he said, adding the process is difficult because positions are added for program reasons and reductions are painful.

Voluntary separation and forced-retirement clarification: Trustees clarified on the record that there is no forced retirement of employees. The board and administration said the district has offered a voluntary separation/severance option to some employees (eligibility thresholds cited publicly were for staff with 15 or more years of service); trustees emphasized that taking such an offer is the individual employee's choice.

State funding uncertainty and timeline: Executive finance staff presented an update comparing the governor's and senate's proposals for school funding. The senate proposed a $400-per-pupil foundation increase but added a provision that 50% of any foundation increase must be used for educator compensation; finance staff cautioned this would effectively reduce the flexible share of new revenue because retirement and FICA on that pay increase are separate costs. Finance staff estimated that if $400 per pupil were enacted and half must be spent on educator compensation, approximately $75 per pupil of that sum would be consumed by retirement and FICA obligations, leaving only about $125 per pupil for other uses.

Next steps and board schedule: Hood said he will offer his recommended budget adjustments in the packet that posts Thursday and will present materials and discussion opportunities at work sessions on May 19 and again before the board's June budget deadlines. The board must adopt a preliminary budget by June 30; Hood and finance staff said they will continue to refine figures as legislative proposals and revenue consensus figures become final.

Speakers quoted or consulted for this article: Superintendent Hood; Executive Director (Finance) (presented funding scenarios); trustees who asked for clarifications.

Ending: Hood urged transparency and community engagement through the process and said the administration will continue to revise the budget with the board as state funding projections and negotiations develop.