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District finance chief outlines multimillion-dollar shortfalls and cost pressures, urges tough choices
Summary
Cabarrus County Schools officials told the board the district faces several revenue shortfalls and rising costs — including grant declines, delayed Medicaid reimbursements, enrollment funding discrepancies, a higher-than-expected EC cost burden and classified-salary study implementation costs — that together require difficult budget choices.
Cabarrus County Schools officials told the board the district faces multiple revenue shortfalls and rising costs that together create a significant budget challenge for the current year and require careful choices ahead.
Philip Penn, the district finance lead, reviewed items that have widened the projected budget gap. He said a federal SRO (school resource officer) grant award for the current year declined by about $200,000 versus the prior year, effectively increasing local subsidy of SRO costs to roughly $500,000 this year. He also flagged delayed Medicaid reimbursements from the state that could produce an estimated shortfall of about $500,000 if quarterly payments are not received in time for this fiscal year accounting rules.
Penn described concerns with the state’s funding-in-arrears ADM (average daily membership) model and a specific discrepancy between the state’s funded ADM and the district’s submitted ADM that, if resolved, could be worth roughly $500,000. He also said fines and forfeitures remitted from the county year-to-date were about $557,000 versus a budgeted full-year expectation of $2.2 million; conversations with county staff are underway.
On the expense side, Penn told the board that exceptional-children (EC) costs were approximately $3.3 million over budget, driven by increased need and use of more-expensive contracted services to cover internal vacancies. He said contracted EC services total about $1 million this year and that the district’s state reimbursement is capped (the state cap for EC reimbursement was described as roughly $5,300 per student while the district’s average EC service cost is about $8,700 per student). Penn said that federal IDEA and state funding alone do not cover the full cost and a local subsidy of roughly $2,000 per EC student remains.
Penn also reviewed the results of a classified-salary study and subsequent implementation costs. He said implementing the recommended salary-scale changes will cost approximately $3.6 million; the district elected to correct placement inequities and pay employees based on the new scale rather than prorate or delay fixes.
The finance presentation also addressed teacher allotments, the district’s approach to holding back positions, international teacher contract fees and program-choice impacts on scheduling and staffing. Penn and district leaders said they will need to make difficult budget decisions and assess which services are needs versus wants during the next budget cycle.
Board members asked clarifying questions about how one-time county funds were applied to pay adjustments, the status of federal grants that had briefly been flagged as frozen by OMB/OPM and whether the district could better constrain allotments going forward. Penn and Superintendent Kopicki said the most recent directive about federal grant freezes was rescinded within about 36 hours and that those funds arrived when needed.
Board members and cabinet officials said they plan to review program choices, virtual course usage, NCVPS enrollments and other offerings that have relatively low participation and a high cost-per-student as possible areas to reduce long-term structural pressure.
Ending: Finance staff said they will continue to pursue ADM reconciliation with the state, follow up with the county on fines/forfeitures timing, and refine allotment and budget recommendations for the coming budget cycle.
