Pittsburgh SD CFO: district ended 2025 with $26M deficit and risks exhausting reserves by 2029

Chief Financial Officer Ron Joseph told the Pittsburgh Public Schools Business and Finance Committee on April 13 that the district closed fiscal 2025 with a $26 million deficit and is currently out of compliance with the board’s fund‑balance policy.

“This leaves us at the end of the year out of fund balance compliance,” Joseph said, noting the board policy requires an unassigned fund balance of 5% and the district ended the year below that threshold. He said the district’s adopted 2026 budget showed a $5.7 million deficit and that early‑year actuals point to a projected 2026 shortfall of roughly $3.8 million.

Why it matters: Joseph warned the gap widens in the coming years under status‑quo assumptions. “Our projected deficits for the next two years are at 15.4 and 22.1 million dollars respectively,” he said, and he flagged an estimated ending fund balance of about $9.8 million in 2028. “We cannot operate using any fund balance because the fund balance won't be there,” Joseph said, explaining that if the district continues to draw reserves it will not have the rainy‑day funds necessary to bridge a budget gap in 2029.

Joseph laid out the principal drivers behind the shortfall. Expenditures came in about $15 million below budget but revenues also trailed expectations by a similar amount, he said. On the revenue side he cited earned‑income tax growth (current‑year collections were up and he referenced about $167.6 million in current earned‑income receipts) alongside declines in current real‑estate collections tied to property‑assessment changes and higher state property‑tax relief allocations. State revenue increased by roughly $4.2 million, but transportation reimbursement fell—partly because some revenue was recognized in an earlier accrual period and partly because the district’s aid ratio declined.

Staff costs and special‑education spending also contributed. Joseph said salary and benefit costs rose in part because temporary SR funding expired and because a 2024 bargaining settlement produced retroactive pay that was paid in the current year. Transportation costs increased for special‑education routes and contracted carriers, he added.

Joseph identified policy constraints on revenue options: the district cannot raise property taxes without regard to the state Act 1 index, which limits the district’s ability to increase tax revenue beyond the cap. He also said that while the governor’s proposed budget could add roughly $1.3 million in state revenue in a best‑case scenario, state and federal budget processes remain uncertain and proposed cuts at higher levels could reduce funding for programs such as Title I, Head Start and IDEA.

Board members pressed for clarification. When a director asked whether the projections on slide 15 were a status‑quo forecast rather than tied to district initiatives, Joseph confirmed they were status‑quo projections. Director Grayson asked for a plain‑language explanation of the 2029 risk; Joseph replied, “we dip into our savings account which are reserves or rainy day fund… when we get to 2029… we won't have the rainy day fund necessary to bridge that gap.”

Joseph also noted bright spots: charter‑school expenditures held roughly level after cyber‑charter tuition reform, earned‑income collections showed growth, and prior‑year tax refunds the district had to pay fell by almost 42% compared with the prior year.

No formal votes or actions were taken at the workshop. Joseph outlined next steps: two more budget workshops are planned (a rescheduled June 8 session on priority goals and investments and a September 8 preview of a preliminary 2027 budget). The committee did not adopt any budget or policy changes at the meeting.

The Business and Finance Committee held the workshop to inform the budget process; the district will need to identify a combination of revenue increases and expenditure reductions, or other structural changes, to return to fund‑balance compliance before 2029.