Hello 742 staff uh families uh and community who are viewing this presentation um this is a presentation that I gave um last night at the school board meeting um and for anybody who doesn't know me I'm Laurie Putnam i'm the superintendent um and we wanted to make sure that we uh got this information to all of our stakeholders um because it's a really critical time um for our schools and for you know public education funding in general um so today's presentation provides an overview of our preliminary budget forecast for the
2025-26 school year and is grounded in the current state funding landscape as you know uh most of our general revenue about 85% is tied directly to state allocations so shifts in legislative funding have significant implications for our planning tonight we'll begin uh today we'll begin with a look at what we know from the governor's budget and current house and senate proposals and explore how those have already impacted and may yet continue to impact our budget we'll also share the ways we responded conservatively and cautiously to the
loss of legislative funding as we completed staffing for 2025-26 as we prepare our budget for the board's approval in June. Before we begin uh even considering those staffing began considering the staffing decisions um we were already facing several key budget assumptions um that place significant strain on our general fund. First we were seeing the expiration of $370,000 in one-time literacy aid its expiration creates an immediate gap in our ability to sustain
the supports those supports moving forward uh without identifying alternative funding sources. Second we continue to experience the impact of unemployment costs for summer staff not being fully funded for fiscal year 26 we are estimating a shortfall of $250,000 related to this ongoing issue and while we've advocated at the state level for a more permanent solution this remains a local liability that we must plan for. Third the governor's proposed change to the compensatory
revenue formula represents a significant concern as proposed it would revise the method by which districts calculate this critical funding stream particularly impacting districts like ours with high direct certification rates the result under the current proposal is a projected loss of $485,000 for our district. While this number may shift throughout the legislative process it remains a key assumption for now and speaks to the broader issue of volatility and funding tied
to student poverty indicators. Altogether these three areas alone represent over 1.1 million in anticipated reductions or underfunded obligations before we even began staffing considerations it underscores the importance of grounding our staffing and budgeting in conservative transparent assumptions so we can navigate this next phase with clarity and shared understanding So to proactively address the known shortfall of $620,000 uh made up of the expiration of
one-time literacy aid again that was $370,000 and the unfunded unemployment insurance costs $250,000 we implemented a series of central office and enrollment based staffing reductions. You can see on the screen what those uh enrollments uh the enrollment based FT reductions were as well as the district um cuts that we had to make these decisions uh were made carefully and strategically uh with the intent to protect classroom instruction as much as possible while
still meeting our fiduciary responsibility. Key reductions include the elimination of five central office positions including the executive director of special projects, the learning and teaching director, two learning and teaching coordinators, and the district truancy and attendance coordinator we also consolidated special education leadership replacing the special education assistant superintendent with a single executive director role in communications we reduced the director position from full-time to .7 aligning support capacity with budget constraints
while maintaining essential services. Additionally we made enrollment based adjustments to classroom teaching staff reducing 2.5 FTE or full-time equivalents based on actual and projected student counts this ensures our staffing levels remain in balance with enrollment which is of course a key sustainability practice. These reductions totaled approximately $620,000 covering the gap caused by those known budget pressures while difficult for sure they reflect our commitment to long-term
fiscal health and our goal to protect student facing roles and programs whenever possible. This slide walks through the projected impact of the governor's initial hold harmless proposal related to compensatory revenue. While the name suggests districts would be protected from funding losses that's unfortunately not the case for St. Cloud Area Schools. Under this plan our district would experience a $485,000 reduction compared to current law that's a significant
shortfall and it's worth stating clearly this version of hold harmless does not in fact hold us harmless. In our district compensatory revenue is allocated entirely to staffing it funds district support positions like interventionists, multilingual teachers, and student support staff who work with our learners who need the most because of the way this revenue is tied to staffing we had to make initial staffing decisions based on this lower allocation amount. The result is a district-wide reduction of 6 FTE which directly affects our
ability to provide targeted academic and social emotional supports for students. After staffing was complete the governor released additional budget recommendations and the House and Senate have also released their budget proposals some of these proposals include additional reductions and others include additional new funding however we are not counting on new funding being likely, given the state's overall budget forecast and how far apart the three proposals are. The most concerning aspect of the House Senate proposals
is the Senate's compensatory hold-harmless and the House's proposal to eliminate school library aid. The Senate compensatory proposal would result in a decrease of over 1.1 million which is over $600,000 less than what we allocated for staffing. The one positive is that all three have included onetime funding to cover 100% of employment costs for fiscal year 26, so it is likely that this funding will be provided while the district has already made reductions to
cover the unfunded unemployment costs it is likely that these reductions could be needed to cover further loss of revenue elsewhere such as compensatory revenue or school library aid. In addition to state level funding changes several other factors are putting additional pressure on our 2025-26 budget planning. First paid family leave will add a new financial obligation, starting January 1 2026 a .88% payroll tax will go into effect. For our district this is estimated
to cost approximately $650,000 in fiscal year 26 alone. While the intent of the policy is supportive the financial burden currently falls to employers and we are preparing for that impact. Second we've budgeted federal funding allocations conservatively estimating a 5% reduction in title allocations this projection is based on the anticipated drop and free and reduced price lunch percentages across the state. A downstream effect of the universal free meals program since federal
funding formulas rely on these counts we're seeing potential declines despite continued local need. Third we're accounting for one-time local costs including city special assessments and a special election together those items total approximately $350,000 costs that must be covered through our fund balance as they fall outside of regular operating expenses. And lastly we continue to see increased special education needs which I'll speak to more specifically on the next slide.
These rising needs come with staffing and service implications that our general fund must absorb when categorical aid falls short each of these items while outside of our direct control contributes to the broader budget picture we are navigating this year. One of the most significant pressures on our budget and our staffing continues to be the rising need for special education services between the 2023-24 and 2024-25 school years we've seen an 8.9% increase
in students receiving special education services that's an additional 251 students. This growth is not only substantial in terms of numbers, but also brings with it increased complexity in student needs service plans and compliance obligations to respond we've had to make targeted staffing adjustments we reallocated seven FTE from within our compensatory holdback allocations to support special education staffing where the need is most acute. In addition we've added six new
FTE positions funded from projected increases in special education revenue. This approach allows us to stay compliant with federal and state requirements while continue to meet student needs in the least restrictive environment. Even with these increases the demand continues to outpace the categorical funding provided, which is why we must often rely on general fund dollars to cover the gap. This is another example of how student-centered budgeting requires us to make difficult trade-offs while focused on our most vulnerable learners
In response to the ongoing budget uncertainty and the specific risk posed by proposed state legislation our board legislative committee took action by sending a formal letter to our area legislators. That communication outlined the potential impacts of proposed proposed funding changes on our district and urge reconsideration of key provisions. In particular we expressed significant concern about the proposed hold harmless compensatory revenue formula changes which as you've seen would result in a substantial funding loss
for our district. We emphasize that this plan fails to account for districts like ours that serve high numbers of students qualifying through direct certification effectively punishing districts doing the right work to reach underserved families. We are also raised serious concerns about proposed cuts to school library aid for us this is not just a line item it's a dedicated funding stream we've already incorporated into our staffing and programming plans, its removal will force us to re-evaluate key literacy and resource supports
in our schools. Our message was clear these changes are not abstract policy shifts they have real immediate implications for students staff and programs and we continue to stay actively engaged as the legislative session moves forward and we encourage our community to do the same. As we look to 2025-26, we remain committed to fiscal responsibility and to maintaining a valid balanced budget even in the absence of an operating referendum. Despite significant and
growing craft subsidies in special education and English learning services we continue to make disciplined student centered decisions that prioritize our classrooms and students our approach reflects a core belief that we must do everything we can with the resources we have while continuing to advocate for the funding our students deserve. Thank you to our board, to our community, uh to our staff, and our students and families for your support your partnership and your shared commitment to our schools and community.