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District warns of $66 million shortfall after 7,000‑student enrollment drop; board urged to weigh referendum and salary tradeoffs
Summary
CFO Heather Frederick told the board the district faced a $66 million FY26 revenue shortfall tied to a roughly 7,000‑student enrollment decline; district used $20 million in staffing adjustments and reserves but projects a persistent gap heading into FY27 and urged continued monitoring of state legislative changes and a local referendum renewal.
Heather Frederick, chief financial officer, told the Palm Beach County School Board the district is confronting a significant revenue shortfall after enrollment fell by a little over 7,000 students following the October count. "We are facing a $66 million shortfall in FY'26," Frederick said, adding that staffing realignments saved roughly $20 million and that drawing down one‑time reserves will be required to balance the current year.
Frederick explained that after adjustments the district had total savings of about $76.6 million from recurring and nonrecurring actions, which created a modest $10.8 million surplus on paper but did not account for proposed salary compensation packages; she said salary proposals could quickly eliminate that cushion. "If you take the $66 million less the $20 million, we are short $46 million," she said, and later described additional costs driven by categorical funding changes that reduced district revenue by about $4.8 million.
Superintendent Michael Burke told the board staff project a further decline of roughly 2,900 district‑operated students next year, noting the district and state use modeling tools and school‑by‑school input to develop forecasts. Burke cited a mix of drivers including immigration‑related enrollment shifts, lower birth rates, affordability pressures in Palm Beach County and competition from vouchers.
Board members pressed for more transparency about modeling assumptions and a school‑by‑school projection. Edward Ferguson asked that staff walk the board through the enrollment models in a future workshop so the board and public can better understand the assumptions driving the budget. Burke said staff would consider additional school‑level briefings while cautioning that forecasting has become more uncertain than in previous years.
The board and staff also discussed the importance of the local referendum revenue that funds teacher supplements, arts and physical education positions and some school security and safety positions. Frederick said referendum proceeds contribute to teacher raises and other staff supplements; board members warned that failing to renew the referendum in November would force deeper tradeoffs in future budgets.
No formal budget action was taken at the workshop. Staff said they will continue to monitor enrollment, the legislative session, and federal funding levels and will return with budget proposals ahead of the Feb. 20 school budget timeline.
