Finance committee leans toward 3.5% pay plan as $9.1M shortfall looms
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Summary
At a Monday finance committee meeting, staff outlined three FY27 budget scenarios to close a projected $9.1 million operating shortfall and explained FY26 state bonus options; committee leadership recommended scenario B (a 3.5% across‑the‑board pay increase) while also reviewing possible health‑insurance plan design changes.
The Frederick County School Board finance committee on Monday reviewed an update from staff on a one‑time FY26 state bonus and three FY27 budget scenarios designed to close a projected $9.1 million operating shortfall, and committee leaders signaled support for a 3.5% across‑the‑board salary scenario.
"The state is providing the state share of funding to provide a bonus payment for all instructional and support staff," said Mrs. Anderson, a division staff presenter, explaining the FY26 state share is roughly $2,400,000 (about $972 per person) while the division’s full cost to deliver a $1,500 bonus to every eligible employee would be about $3,900,000. She told the committee the division lacks the roughly $2,500,000 in unobligated surplus that would be needed to fund the full payout this year.
The committee heard that the state allows school divisions to carry the state share into FY27 to use either for a one‑time bonus or an "equivalent action," such as a compensation supplement that would affect base pay and retirement calculations. "Bonuses, although on paper look nice ... they are unfunded mandates," said Doctor Hummer, who recommended prioritizing permanent pay increases over one‑time payments.
Staff outlined three scenarios to address FY27: scenario A would trim the division’s proposed salary initiative (average to about 5%) but require deeper position cuts (27 additional FTEs) and a 15% reduction to department and school budgets; scenario B would provide a 3.5% increase for all staff, repurpose positions to fund requested hires and require roughly a 10% reduction to department and school line items; scenario C would provide a 3% increase plus a $1,500 bonus by deferring the state share into FY27 while imposing heavier budget reductions. Dr. Hummer told the committee he favored scenario B as it would exceed the most likely state increase and would put more money into salaries that count toward retirement.
Ms. Anderson also reviewed broader budget drivers and county funding: the division requested an $18.2 million county transfer in February; the county advertised funding of about $9.1 million, would fund about $6.4 million for tier‑1 capital projects, and plans to shift funding for 11 replacement school buses from the operating fund to the county capital projects fund. Staff said priorities for the operating fund include continuing a compensation decompression plan, a virtual school pilot, expanded summer school, and extending community eligibility to Millbrook and Bass Hoover schools.
On health benefits, staff presented proposed plan design changes for the division’s PPO and high‑deductible plans to reduce long‑term risk. Ms. Anderson said the division plans to absorb premiums in the coming plan year while making limited changes that would take effect Oct. 1, the new plan year start.
No final budget decisions were made; staff will present refined scenarios to the full school board at a budget work session on April 14 and the board is scheduled to consider adoption on April 21. The committee voted to adjourn the meeting at the close of the presentation.
