DeWitt schools project structural deficit as governor's budget and retirement changes alter revenue

DeWitt Public Schools finance staff warned the Board of Education that changes embedded in the governor's budget proposal and recent retirement funding adjustments leave the district with a structural deficit heading into the 2025-26 budget process.

Rob Spangler, Director of Finance and Operations, told the board the governor proposed a $392-per-pupil foundation allowance increase (about $1.2 million for the district) but that removal of a retirement-offset categorical reduced revenue by roughly $1.1 million. An additional one-time employee health-care reimbursement in the governor's proposal would add about $172,000, Spangler said; after netting those items and a projected retirement expense decrease, he said the district faced a shortfall of about $410,000 before other adjustments.

Spangler said the district began 2024-25 with an approved deficit and that, after accounting for contractual costs, wage adjustments, longevity and substitute-rate changes and some one-time items, the district's structural deficit stood at roughly $634,000. He said pending legislation that would shift a larger share of employee health-insurance costs to districts could add about $500,000 more if it is upheld, which would raise the projected shortfall to about $1 million.

Why it matters: The board must adopt a balanced budget by June. Spangler said the district will use spring enrollment (the "spring count") and staffing reviews to refine revenue and expense projections, and that the board will get another update at a March 10 meeting and during finance-committee sessions.

Spangler listed the main drivers he is tracking: the governor's final enacted budget compared with House and Senate proposals, actual spring-count enrollment, retirements and resignations that affect staffing, and the outcome of ongoing legal and legislative activity related to health-insurance cost shifts. "That is one of the biggest things that we'll have to track parallel alongside our budget process here these next couple months," Spangler said.

Spangler also described several line items and local cost changes: roughly $814,000 estimated for wage adjustments across bargaining groups, $487,000 for future step/lanes/longevity and lateral pay, a modest net savings in medical/dental/vision due to changes in staff coverage elections, and small increases in utilities, property/casualty insurance and substitute costs tied to new sick-leave requirements.

The board and staff agreed on next steps: use updated spring-count enrollment to set staffing levels, compare the governor's proposal with House and Senate budgets as they are released, and hold finance committee meetings as needed. Spangler said architects and staff would continue to prepare materials for the June budget adoption process.

Spangler repeatedly characterized several numbers as estimates and said some calculations would be rechecked with state fiscal agencies. He urged the board to treat the presentation as an early, evolving look at the district's fiscal position rather than a final plan.

Spangler closed by noting litigation and political activity could change the district's outlook: legislation passed late in the previous session that would shift employee health costs to districts is currently subject to lawsuits, he said, and the legal and legislative outcomes would materially affect DeWitt's budget work between now and June.

Looking ahead: Spangler said finance staff will return to the board with updated numbers and that the district will begin drafting options to reduce the structural deficit if required.