Sullivan County schools present worst-case $9.7 million budget gap; board urged to plan long-range capital needs

Sullivan County school officials presented a draft general-purpose school (GPS) budget at a work session that, in a conservative "worst-case" projection, would require using about $9.7 million from the district's undesignated fund balance to balance next year’s budget.

Finance staff who presented the plan told the board that the district received a new TISA estimate in late April that increased its projected allocation, but that much of the revenue is restricted for specific uses. The presenter said the April estimate raises the district’s top-line TISA number, but the district’s actual allocation after state/local splits remains more limited.

The session also reviewed state-mandated and contract-driven expenditures that the district cannot avoid. The district must increase spending on educator salaries by about $988,000 to comply with the state requirement tied to the TISA allocation. Presenters recommended a combined approach—using step increases and a 1.5 percent across-the-board increase for employees—to meet the requirement while offering support staff similar percentage increases.

School finance staff described a series of mandatory cost pressures and optional-but-recommended investments listed in the draft budget:

- Mandatory: $988,000 required increase for educator salaries; approximately $700,000 in step increases already budgeted; anticipated health insurance increases (presenter used a 7 percent estimate). The presenter said the 7 percent health-insurance number came from fiscal staff but emphasized the final insurance rate was not yet certain.

- Recommended (included in the draft but not mandatory): $500,000 for transportation tracking equipment (an RFID/badge or iPad-based student-on/off tracking system for buses), $150,000 proposed for intercom upgrades, and $1 million put into a capital-improvements reserve to respond to emergencies more quickly.

The presenter said the capital-improvement reserve was created from proceeds of a prior property sale (Colonial Heights Middle School), and that about $2.3 million remained in that account before the current allocations; the budget proposal draws on part of that reserve. The presentation also described the district's textbook reserve and a small debt reserve that had been set aside for prior obligations.

School nutrition programs face their own pressure: presenters projected revenues could be down by about $650,000 and estimated a worst-case food-service shortfall of about $1.4 million; the nutrition fund has a built-up balance that could be used if needed. The district also plans to expand the online school from its current size to a 200-seat program as an enrollment-and-revenue strategy.

District staff emphasized this is a conservative presentation. "If you total up all of our revenues and all of our expenditures, we're about $11,200,000 out," the presenter said, adding that after using reserves and required set-asides the draft leaves a $9.7 million gap that the district would plan to cover from undesignated fund balance in a worst-case projection. The presenter also warned that the state requires the district to maintain a 3 percent operating fund balance and that the state could reject a budget that tapped too deeply into reserves.

Board members and staff discussed potential next steps: drawing the GPS budget as a worst-case for presentation to the county budget committee, continuing to refine cost and enrollment estimates, and pursuing options to limit the draw on fund balance. The presenter said the board would be asked later the same evening to vote on a balanced budget to send to the county; final adoption will depend on county and state processes.

The district cautioned that many figures—especially insurance rates, food costs and some TISA components—remain estimates and could change as state numbers and market costs are finalized.