Howard County board hears options to close $9 million gap after county aid, staff present two cut scenarios

The Howard County Board of Education on May 27 heard staff—riefing on the FY 2026 operating budget showing that, after the county executive and county council amended the county appropriation, the board—aces an updated shortfall of roughly $40.5 million between the board pproved request and the final county appropriation, and $15.3 million to cover existing service commitments and negotiated agreements.

In the presentation, a staff presenter said the county executive, Dr. Calvin Ball, committed an additional $14.5 million that the county council unanimously approved, moving the district closer to balance. The presenter said, however, updated cost information (about $725,000 for pension changes, national board certification costs and planning for the blueprint career ladder) and other adjustments have pushed needs higher and left a remaining funding challenge.

Why it matters: the board must adopt a balanced FY26 budget by the scheduled June 12 adoption; staff said final decisions need to be made by the June 4 work session to permit payroll, hiring and schedule changes before many staff leave for summer break.

What staff recommended and why: staff recommended a layered approach rather than a single source of savings. The recommendations included removing nonessential new priorities from the board nd superintendent—udget requests, modest use of the unassigned fund balance, a limited draw on the health fund balance, modestly higher investment income assumptions, and a $1 million transfer from a special revenue account (Learning Together) moving into the operating budget. Staff warned these steps carry risk to reserves and long-term financial stability if overused.

Key budget figures cited in the work session: - County executive/council additional allocation: $14,500,000 (approved by county council). - Updated total shortfall (board request vs. county appropriation): $40,500,000. - Gap to cover existing service commitments/negotiated agreements: $15,300,000. - Recent cost increases cited: roughly $111,000 (pension), $113,000 (national board certification adjustment), $500,000 (planning/support for the Blueprint career ladder), totaling about $725,000. - Proposed fiscal stability measures that increase needs: raise the substitute teacher wage budget by $2,000,000 and reduce assumed turnover savings by $3,100,000 (adding $5,100,000 to needs). Staff said those items are necessary to address recurring cost pressures.

Revenue and reserve options discussed: - Investment income estimate: staff proposed increasing the FY26 estimate from $2,000,000 to $4,500,000, a $2.5 million reduction to the gap while noting investment income is largely outside district control. - Unassigned fund balance: projected unassigned balance about $6,900,000; board policy 40-70 indicates a 1% target (about $12,000,000). Staff recommended using $2,000,000 of unassigned funds but noted that would leave the district below policy. - Health fund balance: audited balance as of June 2024 about $17,900,000; $9,000,000 was identified as incurred but not yet reported (IBNR). Gallagher (actuarial consultant) projected claims for FY26 to be about $5,600,000 higher than previously estimated; staff recommended, with reservations, using $3,000,000 from the health fund balance. - Transfer from Learning Together special revenue: $1,000,000.

Taken together, staff said the three approaches (higher investment income, use of $2 million unassigned fund balance, $3 million from the health fund) plus the $1 million special revenue transfer would reduce the gap by about $7.5 million and leave an approximate remaining shortfall of $9,000,000 to be closed with base reductions.

Two reduction scenarios presented: - Scenario 1 (includes class-size increase at secondary): $7.5 million in school-based cuts impacting about 94.8 positions and $1.4 million in non-school-based cuts affecting about 7 positions. This scenario increases middle- and high-school class sizes by one (with exemptions for high-FRM schools and pre-K/kindergarten) and leaves fewer non-school reductions. - Scenario 2 (no class-size increase): $8.6 million in school-based cuts impacting about 107 positions and the same $1.4 million in non-school-based cuts. This scenario preserves class-size levels but eliminates additional programs and allows the board to fund priorities such as bringing athletic trainers in-house if it chooses.

Staff repeatedly emphasized the difficulty and impact of the choices. "These considerations are very impactful and not decisions to be made lightly," a staff presenter said, and urged that any restorations of positions would require offsetting reductions elsewhere.

Board reaction and next steps: board members asked detailed questions about how proposed cuts would affect special education, gifted-and-talented services, media/library staffing, summer programming and transportation contracts. Staff said they would return with more granular costings and that the board should provide prioritized alternatives so staff can model trade-offs in time for the June 4 work session.

No formal actions or votes were taken during the work session; staff presented recommendations and scenarios for board deliberation and asked members to submit scenario requests for costing. The board and staff agreed to continue refining options before a formal budget adoption vote.

Ending: the superintendent and staff reiterated the timeline: decisions needed by the June 4 work session to permit score sheets and final documents for the June 12 adoption.