Lawrence schools warn of state and federal funding risks; budget update shows contingency gains but special‑education gap remains

Lawrence Public Schools financial staff told the Board of Education Monday that the district is building fiscal strength but faces continued uncertainty from state and federal decisions affecting special‑education and other targeted funds.

"We have met the board's predetermined targets for contingency," Dr. Janice Swift, superintendent, told the board, while cautioning that the district must continue to build reserves because of an environment of "extreme uncertainty."

Cindy Frick, director of finance, gave the spring budget update and walked members through the district’s fund structure, the roles of the general fund, local option budget (LOB), special revenue funds and capital outlay, and how state and federal flows feed those accounts. Frick said the district operates roughly 50 funds and that capital outlay has a cash balance the district can use, if necessary, to replace grant revenues for some projects.

Key points from the presentation and board discussion:

- Contingency reserve: Frick said the district currently holds about 5% of the general fund (approximately $4.8 million) and that the board previously set a target of 6%.

- Enrollment and state budget mechanics: For 2025–26 budget calculation the district must use the higher of the September 20, 2024 or September 20, 2025 pupil counts. Frick said the district expects a decline of about 200 full‑time equivalent (FTE) students for 2025–26, which will reduce state aid tied to enrollment.

- Special education: Frick said the district spent about $29 million on special education in the last year while receiving about $15 million in state and federal special‑education aid, requiring the general fund to transfer roughly $14 million into the special‑education fund. Board and staff discussed a range of possible statewide special‑education outcomes: the district could see as little as a $2.5 million reduction statewide (a worst‑case scenario presented) to as much as $7.5 million in additional statewide funding, depending on the legislature’s final action. Staff said the statewide process could result in a per‑staff or per‑FTE adjustment to special‑education aid.

- Federal funding risk: Board leaders and staff described uncertainty stemming from a federal executive order and related lawsuits affecting the U.S. Department of Education. The board president summarized nationwide litigation and staff warned that reductions or delays in federal program administration could reduce access to programs such as Pell grants, Title programs and other federal supports; the district receives roughly $9 million annually in federal funds when ESSER is excluded.

- Timing: Several state decisions that affect the budget will be resolved in late March to June; Frick said the district often learns the special‑education calculation in June. Board members requested additional detail about the timing of lowest seasonal fund balances and asked staff to prepare materials that could be used in advocacy to explain when balances are highest on July 1 and why that does not reflect discretionary cash.

- Other pressures: Frick said the district expects a health‑insurance increase that will consume a previously capped amount (the presentation referenced a roughly $1.8 million cap tied to projected claims), and noted possible reductions in state program funding for safe and secure schools grants and professional development that could require using capital outlay for previously grant‑funded purchases.

Officials said the district will continue to align staffing to enrollment, prioritize classroom programming and maintain contingency, while preparing advocacy materials and more detailed fund‑timing information for the board.

No formal budget actions were taken at the meeting; the update was informational.