Charlotte-Mecklenburg Schools outlines 2025–26 budget needs, directs staff to draft teacher-supplement plan

Charlotte‑Mecklenburg Schools leaders told the Board of Education at a Feb. 18 special budget work session that state revenue is effectively flat for fiscal 2025–26 and that federal grant terminations and county revenue shortfalls create a constrained funding picture for the district’s operating budget.

The session, led by Superintendent Dr. Hill and CFO Kelly Klutz, reviewed the district’s three primary revenue sources — state (about 53.8% of the operating budget), local (about 34.4%) and federal (about 8.4%) — and the ways recent state tax cuts and potential formula changes could reduce state funding. “Expenses are expected to increase. Revenue is flat,” Dr. Hill said as staff explained the structural pressure that drives planning decisions.

Why it matters: CMS relies on a mix of state, local and federal funds, and a substantial share of several important classroom positions is paid through federal grants. Staff told the board that federal reductions would affect school staffing and programs because roughly 70% of several federal grants are salary and benefits, meaning cuts translate into people costs.

Major federal grant changes and immediate impacts Kelly Klutz told the board that the district received termination letters for two discretionary grants on the day of the meeting: a Teacher Leader Pathway (TLP) grant (about $1.9 million) and a National Board Certification seed grant (about $175,000). She said a third partnership grant with the University of North Carolina at Charlotte was also terminated, and that the termination letters stated the change was effective immediately. Staff noted they had drawn down funds the district had already expended but had not yet had time to respond formally to the written terminations.

Staff presented how many positions depend on federal funding: CMS currently pays 2,153 employees from federal grants, including 1,627 school‑based positions; Title I alone funds roughly 948 positions and has an allotment of about $52.7 million with roughly $20 million in carryover (a total Title I budget noted around $73 million for the current year). Staff emphasized that Title I, II and III and some discretionary grants are at risk and that about 10 percent of CMS staff are supported in some way by federal funds.

Teacher compensation debate and board direction The board spent the bulk of the session on options for the certified (teacher) local supplement. Staff offered five broad approaches: a flat percent increase for all certified staff; an averaged, step‑weighted increase; emphasis on teachers at step 15 and above; leveling remaining schedule dips; and targeted, goal‑aligned financial incentives tied to district priorities. Beth Thompson and CFO Kelly Klutz explained the district’s theory of change — pay, train, develop, retain — and said staff and stakeholder groups (principals, teacher groups and advisory committees) emphasized the need to address teachers who reach step 15 and higher because the state schedule provides little automatic progress for that band.

Board members debated trade‑offs (flat vs. averaged increases; whether goal‑aligned incentives should be paid through the supplement or as a separate incentive). Several board members urged a material increase beyond the draft example of a 5% supplement; others warned of limited county resources and urged realism. After extended discussion the board gave directional consensus for staff to return a recommendation that (a) blends an average increase with targeted emphasis on the 15‑and‑above band and (b) addresses remaining schedule dips. Staff said they will present a formal recommendation at the board’s March meeting; staff also noted the model they previously prepared used a 5% average and said that is the baseline they will include in the March materials.

Other recurring and one‑time needs Staff reviewed recurring needs and one‑time requests that underpin the operating and planning forecast. Items highlighted as recurring needs included the certified supplement, ongoing phases of the classified compensation study (phase 2), assistant principal and specialist pay adjustments, and ongoing device refresh for students. The one‑time asks on staff’s list included technology modernization projects, an Infinite Campus transition, and a multi‑year rollout of a program called Capturing Kids’ Hearts; staff said those typically would not be county recurring asks in the same way the supplement would be.

Five‑year forecast and next steps Staff displayed a five‑year forecast showing recurring pressure from wage and benefit inflation, potential state policy changes, charter school growth and lost federal carryover. They said the district’s current identified needs total about $37 million (recurring and one‑time), but that a county request would need to be smaller and that staff will propose tradeoffs to fit expected local capacity. CFO Klutz said the district had earlier prepared a model that combined an averaged increase with emphasis on step 15+ and smoothing schedule dips; staff will return that model updated to reflect board direction and the preferred numeric scenario for the supplement in March.

Quotations and attributions in this summary come from the session transcript and the presenters listed in the meeting record. The board did not adopt ordinances or take recorded roll‑call votes on the budget at the Feb. 18 session; the session produced direction to staff rather than a final funding approval.

Ending note: Staff will return a formal budget recommendation and a teacher‑supplement model to the board in March, including the baseline 5% supplement scenario and alternative trade‑off scenarios that reflect the combined approach the board asked staff to model.