Budget workshop: declining enrollment and FES expansion cut state funding; district freezes hiring and will present recovery plan April 1

Budget director Mister Remchuck presented the district’s initial 2024–25 budget status at the March 14 School Board workshop, telling trustees that the March (third) FEFP calculation reduced the district’s revenue by about $6,558,539 relative to the prior estimate and that the district’s budgeted expenditures now exceed estimated revenues by roughly $33,200,000.

Why it matters: The district’s unassigned fund balance is projected to fall below the board’s 5% policy threshold; state rules require a financial recovery plan if that level is breached. Administrators said they will present a recovery plan at the April 1 board meeting.

What the presentation said - Required Local Effort (RLE): Remchuck reviewed a long‑term decline in the state’s RLE rate and said the district has seen reduced local funding support; the presentation cites roughly a 42% decrease in the RLE rate over recent years and an estimate that if the RLE had been maintained at prior levels the district would have received an additional roughly $205.7 million over the past decade. - Third Calc impact: The district recorded a $6,558,539 reduction in FEFP revenue in the third calc due mainly to lower traditional (brick‑and‑mortar) FTE and higher counts in Family Empowerment Scholarship (FES) and charters. For 2025–26 the district’s submission projects an additional roughly $8 million revenue loss; Remchuck said the two‑year cumulative impact is about $15 million. - Fund balance trajectory: staff reported the district began the fiscal year with an 11.55% fund balance ratio (driven by prior‑year encumbrances and categoricals), with a September budget amendment showing 7.26% and a January 31 figure at 6.47%; the March projection (after Calc 3) is 4.41% and does not include transfers that might be used to cover summer program costs, negotiated salary increases, or other actions.

FES expansion: Remchuck explained that the Family Empowerment Scholarship program was expanded in 2023 to remove prior income limits; because FES funding follows students into private schools or homeschooling, that program’s rapid growth in the county is diverting state dollars away from the district. He said the district’s 2024–25 third‑calc shortfall included an underestimate of the local FES population by 635 students and that statewide underestimates contributed to lower district funding in Calc 3.

Operational steps announced by administration - Hiring freeze and vacancy control: Superintendent Patton and staff said they froze all new district‑level position hires as of Feb. 1 and will route any requested positions through an allocation committee. They also said district office vacancies were reviewed and many openings have been closed to reduce spending. Patton said, “we froze all of, any new positions.” - Immediate budget actions: staff said departments have been asked to restrict discretionary spending, freeze nonessential purchases, and review supplies and utilities line items for reductions. The administration told the board they already identified multiple smaller reductions in supplies and other nonpersonnel accounts. - Recovery plan: staff committed to present a board recovery plan on April 1 that will include options for restoring the fund balance above the board’s 5% policy threshold (possible transfers, cuts, and one‑time versus recurring adjustments). Remchuck confirmed the district is considering allowable capital transfers and other statutory options and reminded trustees that some capital funds may not lawfully be used for recurring operating costs.

Board reaction and questions Trustees expressed urgency and asked for explicit numbers and timelines. Board member Surdon warned against substituting capital funds for recurring operating costs, saying “Don’t take that bait,” and several trustees said they expect concrete line‑by‑line vacancy and savings tables in the April recovery plan. Board members also questioned whether negotiated salary proposals would be affordable given the projected fund balance; staff said the district modeled the previously discussed proposals and determined one recent offer would reduce the fund balance below 3%.

TRIM and next steps Remchuck reviewed the TRIM calendar and statutory budget milestones (taxable value certification, RLE certification, tentative and final budget hearings). He told the board the district must submit a tentative budget in late July and adopt a final budget in September; the presentation also included the staff recommendation to use conservative FTE projections going forward to avoid a repeat of the March 3 third‑calc shortfall.

Ending District staff said they will deliver a detailed vacancy and savings report and a written recovery plan at the April 1 meeting. Trustees acknowledged the need for immediate action and signaled they will make difficult choices to protect the district’s fiscal health and avoid a possible state takeover if the fund balance falls below the statutory threshold.