Finance chief warns of $8.8 million year‑end shortfall, cites substitute and transportation costs

Mister Hernandez, the district finance lead, told the Finance & Operations Committee on Jan. 20 that the district is projecting an $8,800,000 deficit in the general fund at the end of the fiscal year. Hernandez said the projection excludes most mitigation measures and that district teams are continuing to search for revenue and cost shifts that could reduce the shortfall.

Hernandez said substitute teacher costs are a major driver: “That substitute line right now is showing that it's gonna be about about $1,800,000 in deficit,” and he reported there were “about 2,400” instances of teacher absences in December that drive substitute usage. He added that the district does not have enough substitute teachers to cover all absences and that hiring more substitutes without changing pay structures could increase the budget pressure.

The finance lead also said transportation is a structural cost problem. He told the committee the district projects needing roughly $222,000,000 for the year while the general fund provides about $213,000,000, producing the current gap. Hernandez urged the board and the community to consider whether the district’s open‑eligibility transportation model—where “anybody can get transportation” regardless of home or school assignment—should be adjusted to align services with available resources.

Hernandez described mitigation steps already underway: auditing special education routes to consolidate or eliminate inefficient runs, exploring special‑fund reimbursements where program rules allow, and trying to reduce overtime for security and custodial staff. He said some conservative mitigation assumptions are included in the projection but that most of the $8.8 million shortfall is not yet mitigated.

Committee members pressed for clarity on what the projection includes. Doctor Yarbrough asked whether the $3,000,000 contingency the district has set aside was part of the projection; Hernandez said the $3,000,000 contingency was not counted as an assumed mitigation though it could be tapped later. He pledged monthly updates and said the district will present revised projections each month as more data becomes available.

Hernandez also reviewed special funds, stating the district has approximately $79,000,000 in special funds with roughly $49.8 million still available but stressed that those funds have legal restrictions that limit repurposing for general‑fund needs. He said staff are examining allowable reimbursements but cautioned that special funds cannot erase the structural revenue shortfall.

The committee asked staff to schedule a transportation‑focused update at a future meeting, including vendor performance and electric‑bus developments. Hernandez said community budget forums and school visits will begin as part of next year’s budget development, with draft school budgets shared in coming weeks.

The committee did not take formal action on the projection during the meeting; Hernandez said the administration will continue to refine the numbers and return with updated projections and mitigation details.