Cd’A School District braces for 2025 budget shortfall

COEUR d’ALENE — The Coeur d’Alene School District is forecasting a budget shortfall in 2025.

“The budget for the fiscal year 2024 was initially projecting a surplus of $828,732. However, due to a decrease of $550,000 in state support and additional expenses of $1.9 million, the projected surplus has turned into a projected deficit of $788,000,” wrote Shannon Johnston, the district’s director or finance, in her monthly report which she presented to district trustees at the Jan. 8 board meeting. 

Special education is a main factor in the district’s financial challenges. The district has experienced a $933,030 increase in special education expenses and has received a high volume of requests for full-time special education employees as agency costs continue to skyrocket.

“We’ve had to deny a lot of those requests and really only approve what was legally required,” Johnston said.

Even though special education needs and numbers are increasing, federal funding will not increase, she said.

“The funding really is driven based off of total enrollment,” Johnston said. “We’re not seeing huge increases in the federal funds. It’s about $2.3 million for a more than $10 million budget.”

This is not sustainable for the district’s general fund, Johnston said.

“But we don’t have the answers yet,” she said.

Johnston reported that, throughout fall 2023, the district learned state revenue for 2024 would be less than initially thought. An unexpected decline in enrollment contributed to a roughly $550,000 decrease.

While Johnston’s report covers the current year, which is stable, district officials foresee challenges.

Public education enrollment and attendance trends generally have shifted since the COVID-19 pandemic. From 2020 to 2024, enrollment declined by 1,400 students. The shift to attendance-based funding, rather than the previous enrollment-based funding, means a 7% decline is expected in fiscal year 2025. This return to funding based on average attendance has resulted in a $161 million reduction in funding for public schools across Idaho.

Public schools are being impacted by the expanding number of choices regarding how families choose to educate their children. Kootenai County alone has 33 charter, statewide or private schools.

Inflation is also taking its toll. From 2019 to 2024, the district experienced inflation-related rate increases such as a 20% districtwide utility cost increase of $250,000. Bus fuel costs have increased by $95,000 for a 38% increase in that same timeframe.

The district’s student nutrition program has fallen on hard times, as well. Johnston included the program’s financials in her budget report, which was a first.

“Ever since COVID, universal meals and then, really, cost increases of food, staffing and just the meals that we serve,” she said. “It’s the perfect storm.”

Director of Community Relations Stefany Bales said it’s important to remember the 2025 fiscal year budget is still very much in development. 

“We won’t know what’s in the state’s final budget for K-12 until the legislative session ends in March/April,” she said. “Because we are seeing increased expenses and declining enrollment, which will impact revenue, we are preparing now to manage that and adopt a balanced budget for next fiscal year.”

Having said that, a budget shortfall of any size must be taken seriously, she said.

“Our commitment to transparency with our stakeholders, internal and external, is fundamental to building trust in how we manage through challenges,” Bales said. “We will provide information and updates to our employees, our families, the board of trustees and the community as we learn new information and collaborate with others on a response strategy.”

The situation is fluid right now, Bales said.

“Fully understanding the shortfall and determining the right path forward will be a marathon, not a sprint,” she said.

The district’s first priority is to serve and educate its students as best as possible while they are in the district’s care, Bales said.

“Regardless of the budget picture, that fact remains constant and paramount,” she said.

The district is committed to open communication and transparency as it works through the issues, she said.

“We will meet with our building leaders and others soon to brainstorm and share ideas and information,” Bales said.

In a Thursday staff memo, Superintendent Shon Hocker said the district is operating in a time of higher costs and lower revenue, leading to anticipation of the budget shortfall. The district’s leadership team is in the process of quantifying the shortfall and expects to have more specific information to share in the next couple of weeks, he said, including a response strategy that begins with a list of broad categories for potential cost recovery.

“Addressing the shortfall effectively will most likely require a combination of cost-reduction measures,” he said.

The budget will be discussed in more detail during a workshop from 4:30 to 6:30 p.m. Jan. 22 at Midtown Center Meeting Center, 1505 N. Fifth St. While the budget is not the only item on the agenda, the workshop will serve as an opportunity for trustees to hear more about the factors contributing to the 2025 budget shortfall and how to address it.

    Bales
  

    Hocker