A barely balanced budget

The Marion County School Board meets in Ocala on May 28, 2024. [Bruce Ackerman/Ocala Gazette file photo]

The Marion County School Board on July 22 received a $1.3 billion budget for fiscal year 2025-26 which requires the district to use half of its reserve funds to balance it.

The budget, which includes a $420 million fund balance carryover, will be discussed further at a public hearing July 29 and work sessions on Aug. 7 and 14.

Marion County Public Schools Chief Financial Officer Theresa Boston-Ellis outlined the process and problem-solving that led to balancing the budget. She said the budget process began in January but state revenue projections were delayed, so the finance team moved forward using an estimated budget based on the previous year’s numbers.

By March and April, the district discovered that proposed expenditures exceeded the projected revenue by $64 million. Boston-Ellis explained that $50 million of that shortfall was because federal ESSER (COVID-relief) funding had expired and because of the costs of building two new schools.

Because Marion County property values rose another 10.9% from last year, Boston-Ellis said property owners will see increased property taxes, even though the required local effort by the state, dropped slightly by .003 mills.

To overcome these financial constraints and balance the budget, Boston-Ellis said the team worked “diligently” with department heads and school leaders to begin reducing the general fund operating budget.

She said the district was able to lower expenditures by nearly $47 million by cutting vacant positions at $25.9 million in salary and benefits, $8.8 million from department budgets, and $4.8 million from operational costs.

Boston-Ellis said figures from the state’s conference report also provided some relief as the projected revenue came in higher than the estimated revenue the team used from 2024-25.

She said layoffs would have been made if it weren’t for the fund balance carryover, the conference report that brought in $17.4 million in additional revenue, and the board’s committed fund balance being cut by 50%.

Two years ago, the board decided to put $14 million in a committed fund balance for a future rainy day. Board members mentioned that part of this balance could be used to balance the budget, but as a last resort.

Boston-Ellis said the financial team decided to use that fund, and $7.5 million of it was released to further balance this 2025-26 budget.

Board member Allison Campbell said, “The $64 million that we were short, we’re now balanced, we have that $64 million. But that is inclusive of the $7.5 million cut that this board member (Campbell) specifically did not want us to do.”

Campbell said that by balancing the budget with reserve funds, the board is technically violating a policy it enacted two years ago to reserve a portion of the fund balance. She said that policy will need to be formally changed if the budget is approved as proposed.

Despite dipping into saved funds, Boston-Ellis said a capital outlay millage of 1.5 mills will bring in more money this year, and the district’s voter-approved .5mills will generate an additional $5 million to help offset rising costs associated with school safety and Safe Schools resource officers.

Board members and Boston-Ellis additionally attributed a portion of financial growth to Marion’s rising enrollment. The district projects 1,800 more full-time equivalent (FTE) students than previously expected.

An FTE student who meets certain educational requirements is a key metric for funding.

Out of the 1,800, Boston-Ellis estimates 1,200 will count toward the Family Empowerment Scholarship, meaning the money the district would have received from those students will be redirected.

Campbell said with the uncertainty of federal dollars, she is thankful students continue to come to Marion County and help relieve some of these costs.

Campbell asked Boston-Ellis for the district’s current fund balance percentage, since Florida requires districts to meet a minimum of 3%, and many are struggling to meet that. Boston-Ellis responded that Marion County’s general fund operating reserve is over 5%, putting the district in a relatively stronger financial position than others.

Campbell thanked Boston-Ellis and her team for bringing a balanced budget to the board, and for all the work that they put in. Boston-Ellis said she gives the credit back to the board for setting aside millions of dollars in an accessible fund.

Chair Lori Conrad called for acceptance of the tentative budget, and the four board members in attendance voted to support it. Conrad said the proposed budget was to be posted on the Marion County Public Schools website on July 23.

Boston-Ellis said, “I think Mrs. Conrad said it, ‘This is probably the most challenging year, and it’s not even halfway over,’ and I agree with you.”