Harford County leadership discuss use of fund balance, cuts to balance school budget

With the expectation of a budget shortfall next year because of a decline in state revenue, Harford County Public School officials and the County Council held discussions Monday to evaluate means for the school system to cover its anticipated $40 million gap in fiscal 2025.

The proposed budget, per state estimates, projects Harford County to lose $13 million in income tax revenue. The reduction dashed County Executive Bob Cassilly’s plan to increase the school budget by 5%.

Cassilly, a Republican, said he would not raise taxes. The decision leaves both county and school officials searching for alternatives to cover budget shortfalls; the two top alternatives to covering the shortfall are to use of fund balance or make budget cuts.

The conversation between the council and school officials that took place during the council’s budget work session Monday morning followed the transfer of $16.1 million from the county government into to the school system’s fund balance for “health care rate stabilization.”

School officials said the transfer of funds came without warning April 15. Normally, they said, funds are transferred to stabilize the fund balance after a request.

Superintendent Sean Bulson, explained during the meeting that the $16.1 million coupled with the school’s unassigned fund balance amount of $35 million gives the school system an unassigned fund balance of $51 million.

Bulson stated that the $16.1 million should be used to cover healthcare-related rate increases and expenses. He warned against the use of any fund balance funds to cover school operating expenses.

“As your budget advisers would tell you, use of one-time funds for recurring costs like this is not a good idea,” Bulson said.

According to Bulson, any amount of fund balance used to cover operating expenses in fiscal 2025 would be added to the school’s fiscal 2026 request and force county leadership to engage in the same discussion next year, but with a larger deficit.

“Spending down our reserves is an emergency measure we might take, but, again, what will be the answer when we sit before you with a $60 million request next year?” Bulson said. “I have seen the script played out too many times and it concerns me.”

As of now, the school system has canceled summer school for elementary and middle school students and eliminated transportation for high school students to summer courses. Numerous positions have been “combined” with 10 vacant office positions that have bee eliminated.

Bulson explained that Harford County Public Schools has evaluated the elimination of programs like middle school sports, but the reality is that the only part of the budget that can yield millions of dollars through cuts is in staffing, specifically teachers.

Bulson said that every 10 teachers cut saves $900,000. If the school system can make $7 million worth of position cuts, school officials stated that class sizes across the district would increase by one student.

“It only goes up from there and we are looking at revenue cuts of tens of millions of dollars,” Bulson said. “Flat funding equates to service reductions and there is no other way around that.”

Bolson noted that outside of positions, anything that doesn’t fall under the funding requirements instilled by Blueprint for Maryland’s Future – a statewide funding initiative that aims to increase education funding by $30 billion over the next 10 years – is subject to cuts during a budget shortfall.

Councilman Jacob Bennett, a Democrat, challenged the Cassilly administration’s budget priorities.

“I am deeply concerned that it seems that the only solution to closing the gap and making budgets work in the future is deep, deep cuts to services,” Bennett said.  “I just hope that we can get a plan presented that provides long-term viability for the community.”

A fiscal plan must be approved by the Harford County Council by June 15.

“Since the FY23 budget came out, we have probably experienced some of the greatest inflationary times we have seen in decades,” Bulson said. “So to suggest that we can make due with no additional funding is pretty unrealistic.”