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MCPS narrows projected operating shortfall but special-education costs keep pressure on budget
Summary
Officials told the Fiscal Management Committee that a projected $5 million fall deficit has improved to roughly $3.8 million after central-office spending restrictions and revenue upticks, but special education spending and benefits remain the largest drivers of budget risk.
Montgomery County Public Schools officials told the Fiscal Management Committee on Jan. 28 that a projected $5 million operating deficit identified in fall 2024 has narrowed to about $3.8 million after central-office spending restrictions, targeted savings and improved miscellaneous revenues.
Ivan Alfonso Windsor, the district's chief financial officer, said the September projection first identified a roughly "$5,000,000" shortfall driven mainly by lower-than-expected salary lapse (because more positions were filled) and higher-than-budgeted special education costs. He emphasized the district's fiduciary duty to end the year with a positive fund balance and described monthly financial monitoring used to track that progress.
"That projected deficit at the time was about $5,000,000," Alfonso Windsor said. He and staff described three main responses: enacting spending restrictions for central services, identifying savings in travel and supplies, and pausing noncritical central-office hiring unless specially approved.
The presentation noted the board previously approved a $17,000,000 supplemental appropriation from the district's fund balance to support special education services. Staff clarified the supplemental is a reappropriation of prior-year fund balance that must be approved by the County Council before it becomes available; it is not new recurring funding. Alfonso Windsor said the $5 million projection already assumed that $17,000,000 reappropriation.
Rob Riley, deputy chief of finance, walked members through the monthly-report attachments and explained staff calculate expenditure projections starting from the adopted budget and then revise projections as new encumbrances and expenses arise. In the current monthly report, special education (category 6) showed a remaining projected deficit in the range described in the presentation. Staff told the committee the special-education projection decreased but that category still showed a deficit of several million dollars in the monthly tables.
Staff also pointed to modest revenue improvements that helped the outlook: multi-year payments from a JUUL settlement, higher interest earnings from treasury management and increased state reimbursements for certain nonpublic placements. Alfonso Windsor said those revenue gains have narrowed the shortfall but generally come with related expenditures.
Committee members pressed for more detail on where savings are being found; staff said they will show by category in upcoming reports how travel, supplies and vacancies are affecting the numbers. Staff recommended further review at scheduled work sessions if committee members want a deeper dive into salary-lapse and turnover assumptions.
Next procedural steps: staff will continue monthly reporting, present additional analysis in scheduled February work sessions as needed, and plan a deeper review of salary-lapse and turnover metrics at the committee's March meeting.
