Nettle Creek board warned of $623,000 shortfall; consultant urges proactive "rightsizing" and reserve targets

A financial review presented at a Nettle Creek School Board work session on budget pressures warned the district faces a projected spending deficit in 2026 and urged early, planned reductions to avoid state oversight.

The superintendent opened the meeting by saying the session's goal was to "address the current financial reality of Nettle Creek Schools and to gain a better understanding of where we are now and where we need to be moving forward." She introduced legal counsel Ron Cross and consultant Dr. Brian Harmon of Harmon Consulting to review the district's finances.

Dr. Harmon told the board that school budgeting in Indiana requires estimating student counts months in advance and that recent statutory changes removed earlier "ghosting" protections that smoothed enrollment losses. "Tax rate times assessed value equals levy," he said, explaining the connection between assessed value, tax rate and the levy that produces cash for the district.

Using March and year-end figures, Harmon reported that as of Dec. 31, 2025 the district's education fund cash balance was about $1,000,701, operations about $463,000 and a rainy-day balance roughly $983,000. He said a March report showed education cash at about $1,448,000 and operations near $27,000, numbers that reflect timing differences in property-tax draws.

Projecting 2026 expenditures and revenue, Harmon calculated a likely shortfall. "That puts you at a spending deficit of approximately $623,247 for calendar year '26," he said, while noting the October 1 student-count and the state's final circuit-breaker calculation could change the total.

Harmon recommended a prudential reserve target commonly advised by school business officials: roughly 25 percent of annual expenditures (about $2.44 million based on the district's projected education expenditures). He contrasted that with lower industry guidance and emphasized the operational need for cash to cover months with no operations fund receipts.

Board members and the superintendent pressed on enrollment trends that will drive revenue: the district's current senior class was about 87 and incoming kindergarteners roughly 57—0, a difference that would reduce October counts and increase the revenue shortfall if those projections hold.

To bridge multi-year gaps Harmon described two approaches: (1) accept limited cash-burn in 2026 while planning deeper savings for 2027, and (2) begin rightsizing staff and program offerings immediately so recurring savings appear in the 2027 budget. He warned that the Distressed Unit Appeals Board (DUAB) monitors fiscal health and can intervene if a district fails to align expenditures with revenue.

The board discussed concrete rightsizing steps. The superintendent proposed class-size targets to guide staffing decisions: kindergarten through second grade at about 23—5 students per class and third through sixth at about 25—8. Using that model, administration estimated reducing elementary teaching sections could eliminate five teaching positions, with a quoted annual savings of $380,061.31 (approximately half that realized in 2026 because payrolls are already partially paid). The board also noted two already-accepted retirements that will save about $77,500 and $88,500.

Operations and athletics were raised as separate levers. The board explored options including higher transportation and athletics fees, deeper use of concessions and tournament revenue, and rerouting or consolidating vocational transport. The athletic director said the district currently collects a $10 event/transportation fee and suggested a larger flat or seasonal fee could raise meaningful revenue but could also be unpopular with families.

The superintendent and board agreed to continue the discussion at a follow-up work session focused on operations and to ask staff for a short list of guaranteed savings versus potential savings. Action items recorded at adjournment included: (1) proposed HES class-size targets and review of elementary assistant staffing, (2) review junior/senior high rightsizing options, and (3) an athletics/transportation review to estimate concrete savings or revenue steps.

No formal motions or votes were taken at the session; the board closed public comment and adjourned the meeting for a later date.

The consultants' estimates and the board's initial responses set a timetable: some savings will only be realized fully in budget year 2027 because of payroll timing, while other steps (declared vacancies, retirements and fee changes) could begin to reduce the projected shortfall if approved.

Next steps recorded were staff follow-up to quantify guaranteed savings, a potential demographic enrollment study for longer-term planning, and a scheduled additional work session to continue the operations-side discussion.