The district’s ongoing budget challenges include reductions in state funding, a decrease in the Cost of Living Allowance (COLA), Average Daily Attendance, and increases in other costs: “salary step and column, statutory benefits, health benefits, negotiations,” according to the budget presentation presented by the Business Services team at a board meeting on March 10.
For the Second Interim of 2025-26, the district’s expenditures amount to $186,424,493, while its General Fund Revenue is $175,906,337, according to the same presentation. However, based on the district’s financial self-certification, the district will “meet its financial obligations for fiscal years 2025-26, 2026-27, or 2027-28,” according to the presentation.
When the amount of money that the district receives is less than the amount it is spending, the district is in a deficit, Chief Business Officer Dorothy Reconose said in an interview. Many districts in the area are also experiencing deficits, she added.
“When we get less money from the state and federal government, but our expenditures keep growing — because of inflation, price increases, and the cost of living — it becomes unbalanced,” Reconose said. “A deficit structure means you don’t have a balanced budget.”
Based on how the economy is doing, the state provides a COLA to the money that the state currently gives to school districts, Reconose said. The current COLA 2.3 percent increase is not enough to cover the increase that the district naturally has on a year-to-year basis; for example, classified staff have a natural increase in their salary each year, she said.
“That step increase is easily 5%, and if we get a 2.3% COLA increase from the state, we’re already in deficit just by the natural increase of 5%,” Roconose said. “We’re short there already, and then on top of that, our health benefits also increase, like our medical coverage for employees.”
The school board instructed the district’s executive cabinet to start finding ways to eliminate the deficit, which was $2 million at the time, Reconose said. The superintendent decided to create a committee of staff volunteers to discuss how to address the deficit, she added.
“You (could) nominate somebody to attend, or you (could) nominate yourself,” Reconose said.
The Cost Management Collaboration Team, composed of district employees, presented recommendations to the school board on how to achieve savings, generate revenue, and do cost management at a board meeting on March 10. The recommendations amounted to an estimated total of $3,960,000 over 2026-28, according to the proposal sheet shown at a board meeting on March 24.
On March 24, the school board approved the team’s recommendations with established estimated revenues.
The recommendations outlined several actions to achieve savings and generate revenue, such as discontinuing the use of floater substitutes and revising the Independent Study board policies to increase average daily attendance by 1%, according to the proposal sheet.
The proposal also calls for the reduction of positions, including one full-time-equivalent MHS extension administrator and two full-time-equivalent certificated MHS staff, according to the sheet.
The reductions mostly will not happen until 2027-28 because the state gave districts a deadline of March 14, 2026 to report reductions in positions, Reconose said.
“If things improve, we may end up going back to the board to say ‘Revenue is better, so we don’t need to cut this position anymore,'” Reconose said. “Or, we realize it’s hard to let go of this position because of the work that they do. Or, we let go of the position to capture the savings.”
One of the reductions was a proposal to not have teachers shuttle back and forth between the main campus and the Innovation Extension, since those teachers would need to be paid a certain amount for the travel time, Reconose said.
“Instead, we would provide buses for students to travel back and forth from the main campus to the extension,” Reconose said. “If there are some students who want to do graphic design, or whatever it is that they offer (at Innovation), they can take the bus for free.”
Reconose reached out to several companies to look into early retirement incentives, one of which was Keenan & Associates, she said. Keenan was the most appealing company because they hold group sessions for teachers who would be interested in the early retirement program, and call counselors to do one-on-one discussions, she added.
“What we offered our employees is that after (a teacher works for) five years of service, and is 55 years or older, they will get 70 percent of their annual pay paid over five years,” Reconose said. “If someone is making $100,000, they will get $70,000 divided up over five years, but they’re technically retired.”
After an employee works at the district for five years, their salary increases every additional year, Reconose said. Additionally, the district has an incentive for loyalty called longevity, meaning that once an employee hits the seven-year mark, they will get an additional pay raise every seventh year, she added.
“When you’re looking at one teacher, or one classified employee, for example, they’re getting the highest salary, plus they’re getting the longevity pay,” Reconose said. “With the Supplemental Early Retirement Plan (SERP), the intention is if we capture those employees that are retiring, they take this offer, we hire somebody, and we replace them (with someone) that starts at the lowest salary. Now you have a variance.”
The money an employee receives from the SERP is stored in an account, English teacher Dena Chavez said. They could take the money over five years, or they can leave the money with the district to manage, she added.
“It (money in account) will be more because it’s getting interest; every year it’s getting interest,” Chavez said.
Once the district implements the almost $4 million in proposed solutions, plus the savings from the SERP, the district will be in a good place, Reconose said. This year, the district transferred about $3 million from their building funds to balance their budget, she said.
“But, it (the amount transferred next year) was cut because of the SERP program that we put in our multi-year projection; it cut it in half,” Reconose said.”Now, we’re only transferring $1.5 million for next year, and then about $230,000 for the following year. That’s less than $2 million. If we find this $4 million savings, then we will not be in deficit if we speak to that.”
This year is the first year that the district has had a whole team making recommendations on how to solve a deficit, Superintendent Cheryl Jordan said. Jordan wanted to have everybody’s voices at the table, and it was the best way that recommendations have ever been done, she added.
“I really appreciate all the time that each of the collaboration team members gave to it, and the thought that our managers and Associations Roundtable put into it to begin with,” Jordan said. “It’s a much more holistic team approach to solving the problem.”
