Pueblo D60 warns reserves drained as board debates options to preserve preschool slots

Pueblo School District No. 60 officials told the school board on April 8 that the district is facing a tight fiscal picture and will need staffing adjustments to remain solvent, touching off a heated, multi‑hour discussion about universal preschool funding and reserve policy.

Superintendent Dr. Kimsey told the board that the district began the fiscal year with roughly $35.8 million in reserves, budgeted general fund revenues near $184 million and expenditures of about $178 million. She said that reserves were down about 44% in one year and that the district must fund the second year of contractual pay raises in the 2025‑26 budget cycle.

"For this fiscal year, we need to really get skinny," Dr. Kimsey said, describing measures taken to limit spending, cancel travel and cut consultant contracts. She said some funds in reserves are committed — for example, approximately $3.4 million from prior Colorado Preschool Program (CPP) allocations that CDE indicated must be used for preschool facilities — and that those restrictions reduce the available unassigned balance.

On preschool, the superintendent presented a short‑term plan that would reduce classrooms to one preschool classroom per elementary school, staff two early childhood educators (ECEs) per classroom, add six floater ECEs, retain one coach and one specialist, and account for 16 position reductions (a number she said had dropped because of attrition). She characterized the measure as a one‑year "rainy day" action to preserve core services while the district studies rightsizing and facility conversion options.

Board members voiced sharp disagreement about how to proceed. Director Tebow emphasized the social and educational value of early learning and proposed an alternate approach: designating TABOR reserve requirements by pledging capital assets (substituting property value for cash) to free up one‑time cash and cover the UPK shortfall for a year. He told colleagues that, in his calculation, reallocating the 3% TABOR reserve from cash to capital assets could free roughly $6 million and that, combined with other reserves, the district could cover the preschool gap for a year while pursuing longer‑term rightsizing.

Several board members urged caution. Director Mays and Director Thibault expressed concern about liquidity and the risk of selling assets in an emergency, and Director Mays said she would oppose reducing the district’s self‑imposed 6% reserve without exhaustive analysis. Director De Niro asked for documentation about the state’s demand for return of the earlier hold‑harmless funding (the superintendent said a voicemail from June 28 was the earliest item she had) and stressed the importance of clear timelines for staff to seek other employment if positions would be cut.

Legal counsel and the board discussed the mechanics and precedent for substituting capital assets for TABOR cash reserves; counsel said the statute allows steps such as pledging real property or a letter of credit but cautioned that any plan would require detailed legal and bond counsel review and CDE/CDEC approval. Board members asked staff to seek bond counsel and to clarify whether CDE would approve pledging capital assets in lieu of cash.

Directors took no final vote to change reserves or adopt the superintendent’s preschool staffing plan. The board reached a non‑binding consensus to "look into more options" and directed the superintendent and staff to explore the capital‑assets/TABOR option and bring legal analysis back to the next meeting. The board paused communications to staff and families while it investigates options and agreed to reconvene discussion at the April 22 board meeting.

Superintendent Kimsey repeatedly said she is committed to honoring the contractual raises and minimizing K–12 staffing impacts. She warned that, even if the board preserved preschool funding for one year, the district still faces a multi‑year budget adjustment driven by declining enrollment (the superintendent cited a drop from about 15,700 to roughly 13,000–13,500 students since the pandemic) and by ongoing contractual salary costs.

Board members and staff identified several factors complicating preschool finance decisions: Colorado’s transition from CPP to the new universal preschool (UPK) framework; CDE/CDEC program rules that allow non‑district providers (daycare, in‑home, church centers) to receive UPK funding and often operate with lower labor costs; and the practical difficulty of competing with programs that can offer longer full‑day hours. Staff reported that the district had not required preschool changes in 2023–24 and that some families shifted to other UPK providers when rules and enrollment processes changed.

The board requested legal and financial analyses, including bond‑counsel input on any TABOR capital‑asset substitution, and directed staff to return with options and timelines at the next meeting.