Frederick County supervisors facing at least $2.6 million shortfall as school insurance costs surge

Frederick County staff presented a preliminary FY27 budget to the board during a work session, saying the general fund is currently short by about $2.6 million compared with requested expenditures. "The increase over last year is approximately $3,000,000," said Speaker 2 while walking supervisors through the packet's "blue and white" summary sheet.

The budget overview presented by Speaker 2 held several assumptions: a 3% cost-of-living adjustment for non-school employees, an included school debt-service bump of 1.1 (noted as already known), and placeholders for school operating funding at current levels pending final school submissions. Staff also flagged that health insurance estimates from the county's insurer were pending and that claims to date were higher than earlier projections.

School budget pressures were highlighted separately by Speaker 4, who said preliminary school figures include an approximate 29% increase in health insurance costs plus a 3% across-the-board pay raise. "When you add those two together, it's in the neighborhood of $10,000,000" of additional need for the school division compared with last year, Speaker 4 said. The county's presenter cautioned that the board's $2.6 million shortfall does not yet include non-grant capital requests, new positions, or transportation fund needs, each of which would increase the gap if added to the operating plan.

On revenues, Speaker 2 pointed to projected growth rather than a tax-rate increase: the packet shows a $2.3 million budgeted rise in real estate tax revenue (part of a larger 2.8 figure on the summary slide), and staff emphasized that this reflects projected valuation growth shared by the commissioner of revenue. "One penny on the real estate tax generates about $1,800,000," Speaker 2 said, noting that personal property produces far less per penny.

Capital and personnel items are significant drivers outside the operating baseline. Staff reported $9.7 million in capital requests placed in the general fund packet (including a $6.2 million parks-and-recreation request and $1.8 million for the sheriff) and said departments requested 14 new general-fund positions (two for the sheriff, eight for fire and rescue, one for the animal shelter, one for social services and two for engineering). These capital requests and position costs were not included in the balanced operating assumption.

Supervisors discussed process and timing: after members asked for more time to study voluminous materials, the board agreed to cancel an all-day Friday session and instead schedule targeted department presentations and one-on-one briefings. Staff said it will provide a comprehensive revenue sheet showing potential sources (mills, lodging, meals tax, and the rules governing their use) and a five-year outlook so supervisors can model scenarios. "I'll get you a revenue sheet that'll outline all the potential revenue sources and how much they generate," Speaker 4 said.

Members expressed urgency about generating cost-saving ideas and new revenue options. Speaker 3 urged the board to "throw ideas that are not obvious" and called for brainstorming sessions, saying the county should "have action" rather than wait. Staff and supervisors agreed to meet individually with department heads to try to pare capital requests and to schedule department presentations that will allow detailed questions.

There were no formal votes or motions during the work session. Staff committed to return with updated health-insurance numbers from the carrier, refined school operating figures, a revenue-sources matrix, and five-year projections that supervisors can use for scenario planning. The board recessed pending those follow-up materials.