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Duval schools hear midyear budget update, officials warn reserve will shrink without cuts or revenue
Summary
Superintendent and CFO presented a midyear finance update showing a projected decline in ending reserves driven by enrollment losses, rising salary costs and uncertainty in state funding; district set aside $5 million to soften potential shortfalls and discussed allowable fund transfers that currently mask structural gaps.
Dr. Whitaker, superintendent of Duval County Public Schools, opened a workshop briefing and turned the presentation over to Ron Fagan, the district’s chief financial officer, who delivered a midyear budget finance update.
“This is a midyear budget finance update. . . This is not the solve of $100,000,000. This is a midyear budget update,” Fagan said as he laid out projections and cash‑flow assumptions the district will use in coming budget workshops.
The presentation framed the district’s finances across six major funds—general, special revenue, food service, debt service, capital and internal service—and emphasized that the district’s projected ending general fund balance for 2024–25 will be materially lower than prior years. Fagan said the district currently projects an ending fund balance in the range of roughly $100 million, down from about $171 million at the end of the prior year, and that the roll‑forward of that lower balance will reduce the starting point for the 2025–26 budget.
Why it matters: board members pressed officials on whether a one‑time higher ending balance this year would eliminate the structural shortfall next year. Fagan and Dr. Whitaker said the answer is no—because the budget rolls that lower number into the next year and because spending trends (notably salary averages and enrollment‑driven revenue) still point to a gap. “If we finish with a hundred [million], that doesn’t solve our problem,” Dr. Whitaker said.
District staff flagged three drivers of the gap: declines in student FTE that reduce state funding, a mismatch between reported “average salary” used in budget models and actual payroll costs, and increased costs in key lines such as health care and transportation. Fagan walked the board through several management levers the district has used or can use: transfers permitted by state rules (for example, moving capital funds to cover contracted transportation or property‑insurance costs), tightening non‑salary expenditures, and continued examination of program and facility consolidation.
Food service and federal reimbursements also featured in the discussion. Fagan said the food service fund is subject to reimbursement timing and federal rules; the U.S. Department of Agriculture requires districts to maintain about three months of average expenditures in the food service fund and can require corrective action if balances are too high or too low. That constraint limits how freely the district can shift those dollars.
On state revenue, the presentation summarized elements of the governor’s proposed budget. Fagan said the governor’s proposal would provide Duval roughly $27 million in new formula money (about a 2.4–2.5% increase for the district), but he cautioned the board that those figures are proposals until the Legislature completes action and that scholarship and FTE counts remain major sources of uncertainty.
To blunt an expected shortfall in the current year, Fagan said the district had already “set aside $5,000,000 to soften that blow,” and staff described prior one‑time transfers the district used in 2022–23 and 2023–24 to manage cash flow. Board members asked for more detail on transfers and on line‑item drivers—questions staff said they would provide in follow‑up materials and in upcoming workshops.
Board members also pressed staff on whether the district runs a zero‑based budgeting exercise and on how quickly enrollment trends can be modeled. Staff said they perform line‑by‑line reviews annually and use a set of forecasting tools, but cautioned that some key inputs (third‑count FTE, the Legislature’s final action on the governor’s proposal, and final contract settlements) remain unknown and materially affect projections.
The presentation concluded with staff proposing to return to the board in later budget workshops with concrete options—reductions, consolidations, and revenue strategies—to reach a target 3% operating fund balance and produce a balanced 2025–26 budget.
Board members asked that future materials break out the items that are one‑time or timing artifacts (for example, aggressive capital spending schedules) from recurring operating costs so the board can see the structural deficit clearly.
