The Lee County School Board was told Tuesday that the district will tap into the capital fund to offset an expected multi-million dollar deficit.<\/p>\n
\u201cThis deficit we are anticipating for next year we will offset with an increase transfer from capital funds,\u201d Chief Financial Officer Sarah Cox said.<\/p>\n
The budget overview began with Deputy Superintendent Dr. Ken Savage stating that Tuesday\u2019s workshop was one of the most important budget workshops that they will have all year. The workshop was one of the most critical for a few reasons \u2014 the district kicks off its fiscal year on July 1, and the day-to-day, moment-to-moment details they are living through in the schools, departments, and divisions.<\/p>\n
Cox said the purpose of the workshop\u2019s presentation was to provide a clear look at the district\u2019s financial landscape.<\/p>\n
She explained that the general fund balance \u2013 the district\u2019s savings account \u2013 is broken out into four categories. Those include the unassigned \u2013 the most flexible fund; assigned \u2013 funds spent in subsequent years; restricted fund \u2013 funds spent on certain things, and non-spendable fund balance \u2013 the district\u2019s warehouse where they purchase supplies in bulk.<\/p>\n
The fiscal year 2026 financial outlook has a beginning fund balance of $185,685,212. There is a decrease, deficit, in the fund balance of $46,730,524.<\/p>\n
\u201cCapital transfer is a strategy and one we must be intentional for our financial future,\u201d she said.<\/p>\n
Cox said they begin with the fund balance and add new revenue and other revenue sources before deducting expenditures to get the ending fund balance. The fiscal year 2026 has a beginning fund balance of $185,685,212, new revenue of $1,018,452,930, and other revenue sources of $45,674,248. The ending fund balance is $138,954,688 for a decrease in the fund balance of $46,730,524. The transfer from capital is $45,427,705.<\/p>\n
She said there is an intentional effort to reduce the district\u2019s savings account.<\/p>\n
\u201cIf a fund balance grows too large, it can be a sign of an underinvestment on daily operations,\u201d Cox said.<\/p>\n
She said they are anticipating a reduction with the fourth calculation of the Florida Education Finance Program. Cox said the most recent forecast is more than $92 million deficit.<\/p>\n
To minimize the shortfall, she said they are transferring $45.4 million from the capital.<\/p>\n
\u201cThere is potential for the unassigned fund balance to fall below 10%,\u201d Cox said of the unassigned fund balance. \u201cIt\u2019s about a sustainability mindset rather than a growth mindset.\u201d<\/p>\n
Cox said a capital transfer to the general fund is allowable by Florida statute.<\/p>\n
Savage said through the pandemic the district continued to grow. He said the challenge was a significant increase in teacher vacancies \u2013 575 teacher vacancies a year ago.<\/p>\n
The good news \u2013 the district is down to single-digit vacancies in various regions.<\/p>\n
\u201cUnfortunately, now we are experiencing declining enrollment,\u201d Savage said, adding that it is impossible to predict with 100% accuracy. \u201cWe have to build a budget under conservative guardrails.\u201d<\/p>\n
He said Florida has a unique model \u2013 an equalization model that leverages local property tax with state funding for a certain level of quality education.<\/p>\n
\u201cEverybody in our state has a quality education,\u201d Savage said. \u201cBeyond that threshold, a district can levy additional millages.\u201d<\/p>\n
He said in Lee County, through federal stimulus and programs, they have invested in their schools well beyond that state funding model.<\/p>\n
\u201cNow we have a situation \u2013 fully staffed. You are budgeted for students that did not show up and staffed for people that didn\u2019t show up,\u201d Savage said. \u201cWe are putting about $30 million more beyond generated through FTEP model to our schools.\u201d<\/p>\n
He said if you want to raise people\u2019s salaries, but there are not additional revenue sources, you have to pay for that by cutting costs in other places.<\/p>\n
\u201cWe actually want to deficit spend until we get to a desired threshold,\u201d Savage said, which is 10%, unassigned fund balance.<\/p>\n
The district has been in excess of 10% for quite some time for the unassigned fund balance.<\/p>\n
There has been \u201ca lot of attention at the federal level when talk about DOGE \u2013 the thought process behind is really about providing fiscal stewardship in governance,\u201d Savage said, adding that it is a very powerful thing to lead with a purpose spending every penny they have with a safeguard.<\/p>\n
Cox said looking to fiscal year 2027 they continue to project a deficit.<\/p>\n
\u201cFactors that are affecting fiscal year \u201927 budget \u2013 declining enrollment, expansion of student choice, stabilizing property values and declining interest rates and inflation,\u201d she said.<\/p>\n
In fiscal year 2026, the district saw the first enrollment decline outside of COVID.<\/p>\n
She said the projection portal typically opens in January when the state provides districts with a few different models. Cox said they chose the growth model maximum allocation through FTE at the start of the year.<\/p>\n
\u201cIf they don\u2019t show up, we are prepared for reserves of funds later in the year,\u201d she said.<\/p>\n