PPS budget workshop: CFO reports $11.5M 2024 deficit, warns of 2027 fund balance risk

Pittsburgh Public Schools Chief Financial Officer Ron Joseph presented the first of three required budget workshops to the Business & Finance Committee on April 7, 2025, reporting that the district closed fiscal 2024 with an $11.5 million deficit and that, without changes, the district's unassigned fund balance is projected to run out during 2027.

Joseph led the committee through unaudited 2024 general-fund actuals, state and federal funding outlooks and next steps in the budget process. "We ended the year at an $11,500,000 deficit," he said, noting that the result was an improvement from prior projections but still reduced reserves.

Why it matters: The district's finances determine its ability to operate schools day-to-day and to preserve programs. Joseph said revenues have grown but expenditures have grown faster; the district's fund balance declined as a result, and the board must consider cost reductions, potential revenue options and policy guardrails for the 2026 budget process.

Key fiscal findings

- 2024 result and trend: Joseph reported a $11.5 million deficit for 2024, down from a projection near $30 million, and said PPS's fund balance has been steadily declining over the past decade. He said that, if current trends continue, the district could exhaust its usable fund balance during 2027 and would face cash constraints.

- Revenue drivers: Joseph said local revenues (earned income and real estate taxes) increased overall but that current-year real-estate collections have softened while prior-year delinquent collections remained strong. State funding changes in the governor's proposed budget were described as modest at best; Joseph said the district is effectively level-funded in basic education aid under the governor's proposal, with larger proposed increases targeted elsewhere statewide.

- Federal funding and ESSER timing: Joseph told the committee the district expects about $56.6 million in federal funding for 2025–26 but warned of a change in ESSER liquidation rules: "we are at risk of not being able to get reimbursed for all of our ESSER funding," he said, referencing a federal decision that shortened the late‑liquidation period and could leave the district with unreimbursed costs. Committee members later cited an estimate of $15 million in unreimbursed ESSER obligations.

- Expenditure pressures: Joseph identified several large expenditure drivers: charter-school tuition, transportation, tax-appeal settlements (which rose more than 200% year over year in 2024) and personnel costs. He said charter expenditures were approximately $13 million higher than in 2023 and that transportation costs are a multi‑tens‑of‑millions item in the operating budget.

Board priorities and next steps

Joseph asked the board for guidance on budget priorities and guardrails as staff prepare 2026 budget scenarios. He described a staged approach to find savings: begin with nonpersonnel contract reviews; then consider personnel and programmatic adjustments, while seeking to protect direct student-facing programs where possible.

Directors asked questions and offered priorities. Several directors stressed the importance of preserving core academic services and minimizing cuts that would directly reduce classroom instruction. Board members also asked for more detail on cost and savings tied to potential school consolidations and building dispositions and sought clearer timelines for any recommended program or staffing changes.

Other committee inputs

- Disposition and consolidation planning: Directors noted the district's existing disposition policy for unused buildings and the need to execute on a disposition plan for a small remaining set of vacant properties while the district proceeds with any consolidation planning.

- Transportation and special-education costs: Committee members requested specific drivers behind a notable year-over-year transportation increase; staff said timing and special-education transportation reimbursements contributed to volatility and that transportation totals represent a material portion of the operating budget (roughly in the low single‑digit tens of millions annually).

Ending and follow-up

Joseph asked the board to provide priorities and guardrails to guide staff as they build the 2026 budget, and directors signaled a preference to balance the budget while protecting direct instructional programs. Staff said they will bring detailed scenarios, contract reviews and programmatic options to future budget workshops and to agenda review for board consideration.