District finance chief warns of $5.1M FY24 operating loss; board told to identify $2.4M in reductions

Jonathan, the district’s finance director, told the board the local fund closed FY24 with a cash-basis loss of about $5.1 million and an estimated unassigned fund balance of roughly $396,000 as of June 30, 2024. He said the primary driver was salary and benefit spending that exceeded budget by about $7 million as staff vacancy rates fell and lapsed-salary savings vanished.

"As of the year end fiscal '24 in the local fund, the district experienced a $5,100,000 loss," Jonathan said, noting those are preliminary, cash-basis numbers subject to audit adjustments. The district’s continuation budget assumptions for FY25 incorporate projected revenue increases (including adjustments to the special district tax and state items), but after accounting for those and the corrective actions already in place, administration estimates a remaining shortfall of roughly $2.4 million to produce a balanced FY25 budget.

Jonathan explained the options: appropriate fund balance to cover the gap (not possible this year because fund balance has been largely spent), enact operating reductions, or seek county assistance as a one-time backstop. He warned that cash-flow pressure could arrive earlier than past years—potentially in September—so staff will open immediate conversations with the county manager and commissioners.

Board members asked for a collaborative package of options to consider rather than asking staff to unilaterally choose cuts. Several members emphasized that, because roughly 80–90% of the district’s budget is personnel, meaningful solutions will require discussion about staffing, service levels and longer-term structural changes. One member asked whether there are legal constraints on action; the board’s attorney noted the district is required to adopt a balanced annual budget and that policy targets for fund balance (the county’s 5.5% guideline) are advisory but significant for funding relationships.

Administration was requested to prepare a menu of reduction and revenue options large enough to close the $2.4 million hole and preferably to begin rebuilding a modest fund balance; staff said they would return with proposals in August and would simultaneously reach out to county leadership about the county’s willingness to provide emergency cash flow assistance if needed.

The board took the report as information and directed staff to return with a collaboratively developed corrective and contingency plan.