Orange County Schools outlines conservative FY26 budget, cites $205,000 local shortfall and state funding uncertainty

Orange County Schools finance staff presented a draft fiscal-year-2026 operating and capital budget on June 23, saying the district faces a $205,000 shortfall in local funding and uncertainty about the state budget.

The presentation to the Orange County Board of Education detailed knowns and unknowns for FY26 and explained that the district is preparing for a range of scenarios, including flat or reduced state funding. “We do know in our local budget right now that we do have a $205,000 shortfall,” Ms. Rath said during the work session.

The nut graf: The district is planning conservatively as one-time federal ESSER carryover ended, student enrollment fell and benefits and other operating costs are rising; staff plan to tighten discretionary spending, shift eligible expenses to state or federal dollars where possible, and bring a final budget to the board on Aug. 18.

Ms. Rath said local funding compared with FY25 shows an overall increase of about $1.2 million, and per-pupil local funding increased by $211 even as enrollment decreased by 78 students. She noted the district expects increases in salaries and benefits, and continues to see rising costs for utilities, food, gasoline and charter-school transfers.

On federal funding, Ms. Rath reminded the board that the district’s prior federal budget included ESSER carryover that “sunset in September of 2024,” reducing beginning federal balances for FY26. In response to board questions, she said the district planned for the ESSER funding cliff and does not anticipate additional cuts beyond those already planned, but added that federal and state uncertainty remains.

Board members pressed for clarity on federal versus federal-allotment terminology and on the structure of federal carryover. Ms. Rath explained that Title I carryover and other small federal carryovers account for differences between federal allotment documents and total federal funding reported.

Board discussion also covered charter-school transfers (board members cited about $6.6 million in transfers), and the district’s fund-balance position. Ms. Rath said the current preliminary fund-balance is being finalized as books close; she recalled a recent year-end balance “around 4 to 4,200,000” but said an audited final number will come after closing. The county target for the district’s fund balance is 5.5% of expenditures, she noted.

Staff outlined next steps: continued departmental reviews, tightening discretionary spending, and preparing a budget for the Aug. 18 board meeting with amendments to follow if and when the state budget is finalized.

Ending: The board did not take action on the budget at the June 23 meeting; staff will return in August with a proposed FY26 budget and periodic amendments as state and federal guidance becomes available.