CFO warns of $2.5M gap next year after $1.5M insurance spike and TK funding cut

Peninsula School District’s chief financial officer told the board on June 9 that while the district is currently showing expenditure savings, it faces a projected budget shortfall heading into the next fiscal year driven by outsized insurance costs and the loss of a state funding stream.

"We have almost $2,000,000 in expenditure savings," CFO Ashley Murphy said in the budget update, but she also reported that the district had been notified of a roughly $1,500,000 increase in liability insurance costs going into next year and a $1,000,000 revenue reduction for the district’s transitional kindergarten program following the recent legislative session. ‘‘So the district already knew that we were going to be in the rears by $2,500,000 just starting the year,’’ Murphy told the board.

Murphy said revenues for the month of April are roughly 1% under budget, with local sources about 4% under and state and federal sources modestly above. She emphasized the district is scrutinizing spending to offset the gap and noted statewide discussion among CFOs about creating statutory financial-health indicators to prevent districts from reaching binding conditions. "One common variance...was payroll and benefits in excess of 85%," Murphy said about districts that had encountered fiscal distress.

Board members acknowledged the challenge and asked whether other districts would make the tough staffing and salary decisions to avoid binding conditions. Murphy said that some districts resist such steps and that a legal or statutory framework could help. The board will continue budget reviews over the summer as staff refine recommendations and implementation plans for next year’s budget.