Howard County board hears options to close FY26 budget gap, considers class-size and program cuts

The Howard County Board of Education heard detailed proposals May 27 to close a shortfall in the school system's FY26 operating budget and to narrow a larger difference between the board's requested budget and the county appropriation.

Superintendent (presenter) told the board the updated shortfall between the board—s requested budget and the County appropriation is $40.5 million, and that after several adjustments the remaining gap to cover existing service commitments and negotiated agreements is roughly $20.4 million. After recommending a mix of responsible draws on fund balances, a larger investment-income estimate and a $1 million transfer of reserves from a special revenue program, staff said the remaining amount to be found is about $9 million.

The proposed tools to reduce the gap range from one-time actions and revenue changes to recurring program and staffing reductions. Superintendent (presenter) framed the options as choices between maintaining current service levels and restoring board priorities, and warned that many of the options would affect valued staff and programs. "My heart hurts and goes out to staff who are questioning the security of their positions," the superintendent said.

Why it matters: The board's decisions will influence staffing levels, class sizes and some student-facing programs for FY26. Staff told members the board must make final decisions at the June 4 work session to allow time for the June 12 formal budget adoption and for operational offices to implement staffing and scheduling changes before summer break.

Key revenue and cost updates - County contribution: County Executive Calvin Ball proposed and the County Council approved a $14.5 million addition to the schools' budget through a county charter mechanism for recurring PEGO funds. Staff credited the executive and council for narrowing the original shortfall. - New cost items: Staff reported three recently updated cost areas that increase FY26 needs by about $725,000: pension cost adjustments (~$111,000), a national-board certification cost adjustment (~$113,000) and $500,000 for planning and support for the Blueprint for Maryland—s Future career ladder framework. - Net positions: With the county addition and the new cost assumptions, staff said the board—s requested budget is now $40.5 million above the final county appropriation; the gap to simply maintain existing services and negotiated increases was described at different points in the presentation as $15.3 million and then $20.4 million depending on which removals and recurring adjustments were assumed.

Staff recommendations for fiscal stability and one-time revenue Staff outlined measures they judged reasonable to help narrow the gap while limiting long-term risk: - Increase the substitute wage budget by $2.0 million to match recent overages in substitute expenditures. - Reduce assumed turnover savings by $3.1 million (including $1.6 million to special education and $1.5 million to state category 3) because turnover savings have not materialized as expected. - Increase the investment-income estimate from $2.0 million to $4.5 million (a $2.5 million reduction in the gap) while cautioning that the school system has little control over investment returns. - Use $2.0 million of unassigned general fund balance (staff projected approximately $6.9 million in unassigned balance at year end and noted board policy 40-70 guidance of roughly $12 million for FY26). - Use $3.0 million of the health fund balance, with staff noting the audited health fund balance was about $17.9 million and that roughly $9.0 million of that is reserved for incurred-but-not-reported claims; benefits consultant Gallagher recently projected roughly $5.6 million more in FY26 claims than previously estimated. - Transfer $1.0 million from the Learning Together program special revenue account as that program is moving into the operating budget. Staff said those combined steps could reasonably reduce the remaining gap by about $7.5 million but cautioned that aggressive draws and overly optimistic earnings estimates would increase long-term fiscal risk.

Two reduction scenarios for the remaining gap Superintendent (presenter) and staff presented two scenarios for board consideration that would close the remaining recurring gap. Both scenarios were built in consultation with principals and other school-based leaders and were intended to preserve negotiated compensation increases while reducing positions and programs. - Scenario 1 (includes a one-student increase in secondary class sizes, with exceptions): $7.5 million in school-based cuts (impacting about 94.8 positions) plus $1.4 million of non-school-based cuts (about seven positions). This option increases secondary class sizes by one in many schools but exempted pre-K, kindergarten and Title I elementary schools and schools with Free & Reduced Meals rates above the stated threshold for some changes. - Scenario 2 (no class-size increase): $8.6 million in school-based cuts (about 107 positions) plus the same $1.4 million in non-school cuts. This scenario preserves class sizes but shifts reductions into other programs and personnel and, staff said, could allow funding of a priority like bringing athletic trainers in house.

Examples of proposed changes discussed by staff and board members included eliminating middle school paraeducators, converting one of two high-school library/media specialist positions to a paraeducator, reducing leadership interns, reducing the number or hours of high-school teacher secretaries (staff proposed a 0.5 reduction at 12 comprehensive high schools), cutting some dual-enrollment or summer-program sections, eliminating some elementary media paraeducator positions and reducing elementary gifted-and-talented (GT) services and third-grade strings. Staff repeatedly emphasized that the proposals were meant as starting points for board deliberation and that many of the reductions could be modified or swapped at the board's direction.

Special education and other mandated costs Staff said they had placed targeted additional funding in the proposal for special education needs: an additional $7.0 million for nonpublic placements, about $1.1 million for contracted special-education services and $1.75 million set aside for strategic special-education improvements tied to the department—s upcoming plan. Staff cautioned that special-education turnover-savings assumptions had not materialized and that the system had redirected salary savings to contracted services in many cases.

Transportation, contracted buses and collections debate Board members and transportation staff spent substantial time on transportation policy and cost-control options. Key points from that discussion: - Contract exposure: Student-transportation staff and the chief operating officer said the system had contracted for buses and ordered vehicles; some buses have already been delivered. That creates contractual exposure and potential costs if the district tries to reduce service or routes after orders are placed. - Opt-in data: The district has an opt-in form for families to request bus service, but staff said enforcement and the ability to deny families service based on opt-in responses have been limited; the district historically has "opted in" nonresponsive households because of enforcement challenges. Transportation reported fluctuating opt-in completion rates and that enforcement difficulties limit the utility of the opt-in forms for precise routing. - Charging for transportation: Transportation director Johan Thap Siddiqui presented a back-of-the-envelope estimate that charging all general-education families who do not qualify for free/reduced-price meals would require roughly $800–$900 per student per year to offset costs. Staff explained collection and enforcement would be operationally difficult and that fixed contracts for buses mean fee revenue may not offset contractual obligations.

Other program details discussed - Dual enrollment: Staff said the dual-enrollment program costs about $3.2–$3.3 million; transportation for dual-enrollment students was described as an insignificant incremental cost because most shuttle service is folded into existing routes and five-hour minimums in contractor pricing. Staff said dual-enrollment is governed by COMAR and by a memorandum of understanding with Howard Community College as part of Blueprint requirements. - Summer programs: Staff explained the district runs several summer programs (academic intervention, credit recovery/original-credit courses, BSAP and GT programs). Credit-recovery classes are fee-free by state policy; some acceleration courses charge tuition but many seats are subsidized or covered by scholarships and reduced rates for families who qualify. - Athletic trainers: Staff estimated an in-house program for 13 athletic trainers would add approximately $1.5 million in salary/benefits but would net about $970,000 after eliminating current contracted trainer costs.

Board questions and next steps Board members pressed staff for detail on vacancy rates, how many of the positions proposed for reduction are currently vacant, how many substitutions or long-term subs drive substitute-cost overages, and the operational exposure tied to transportation contracts. Several members urged stronger collections and enrollment-payment systems for optional services (summer programs, extracurricular fees) while others emphasized equity and cautioned not to penalize students for family nonpayment.

Superintendent (presenter) and staff told the board they will prepare follow-up materials and costed substitutes to the two scenarios, and staff asked board members to submit any edits to scenario preferences promptly so staff can prepare for the June 4 work session where final choices should be made in time for the June 12 budget adoption.

Ending The board conducted the meeting as a work session and did not adopt the FY26 budget at this session; staff framed the proposals as options for the board—s June deliberations and reiterated the timing constraints affecting operational offices that must implement any changes before staff leave for summer break.