Cabarrus County Schools deficit narrows to about $5.2M; board to use fund balance and adopt continuing resolution

Philip Penn, a district finance staff member, told the Cabarrus County Board of Education at its June 2 work session that the districtdeficit for the 2024-25 fiscal year had narrowed to about $5.2 million.

Penn said the change reflects an $879,000 settlement letter tied to Medicaid reimbursements and $1.6 million returned to the district by Kids Plus. "That greatly increases the likelihood we will see those funds prior to the end of the 20 three-twenty 4 fiscal year," he said, and added that the district could close the gap "using some of the remaining fund balance that we have at this point." He cautioned that using fund balance reduces reserves available in future years.

Why it matters: the board must balance paying near-term obligations and preserving reserves for future years. Penn described the situation this way: "It's a bit like tapping your savings account to close an expense need in your checking account. Once you do that, it's not like the money goes back." He also said the district had frozen nonessential spending for the remainder of the year to limit the deficit.

Details the board received: - Projected deficit: about $5,200,000 as of the June update. - Anticipated positive items: $879,000 from a Medicaid settlement and $1.6 million returned from Kids Plus. - Fund 8 (special revenue) contained $1.1 million previously designated for use; that also reduces available balances going forward. - Collections and revenue notes: fines and forfeitures have trended higher recently, and delinquent tax collections have dropped relative to prior years. - Cash flow and timing: Penn noted a large payroll and supplements cycle in June — roughly a $10 million payroll outlay — and said the district is monitoring cash flow carefully.

Board action and next steps: Board members agreed to add "Budget Amendment No. 8" and a continuing budget resolution for fiscal 2025-26 to next week—9s consent agenda. Penn said final year-end closeout work (purchase-order and invoice reconciliations) and a final internal PRC review would determine the precise fund-balance appropriation the board will approve at its June 30 meeting.

Context and caveats: Penn said the district will likely need to use part of its fund balance to close the deficit, and rebuilding that reserve will depend on future surpluses. He also urged advocacy with county decisionmakers about the district—9s budget request as the county finalizes its funding decisions.

Ending: The board moved the budget items to the consent agenda for next week and instructed staff to finish year-end reconciliation so a final appropriation can be presented at the June 30 meeting.