Loss of COVID-era monies, reduced state funding led to deficit, Springfield school district says

The underlying causes of the deficit are not tied to a single funding source stopping at a specific point in time, Superintendent Bob Hill said, but are a result of the expiration of federal, COVID-era money from the Elementary and Secondary School Emergency Relief Fund (ESSER), in addition to revenue limitations under current state funding and property tax law and continued growth in personnel and transportation costs.

The district’s general fund revenues for fiscal year 2025 total approximately $110 million, with 73% state sources, 70.3% state foundation, 27% local sources, 22.8% real estate taxes, 4.7% other local and 2.2% other state, according to the most recent five-year forecast.

The district’s general fund operating expenses for fiscal year 2025 totaled approximately $116.8 million, with 58% wages, 24% benefits, 12% services, 5% materials, 1% other and 0% capital.

The decision to continue deficit spending in fiscal year 2026 was made to avoid disruption to students, according to the five-year forecast.

Significant efforts were made to reduce the projected deficit to a more manageable level, according to the district, which added that its current cash reserves provided flexibility to take a strategic approach in reducing costs and moving toward a balanced budget.

Deficit spending, declining cash balance

The district’s declining cash balance and “the need to move toward a balanced budget“ was first identified in the November 2023 financial forecast, Hill said.

“(This) served as the formal ‘early warning’ point where the cash balance trajectory and deficit spending pattern required an intentional, multi-year correction plan rather than year-to-year patching,” he said.

Hill said the district’s plan that emerged centered on one objective: to “stop structural deficit spending by aligning recurring expenditures to recurring revenues, while protecting core instructional services and meeting all legal obligations.”

The forecast flagged the problem early enough to act responsibly, Hill said, and to build a plan with a multi-year strategy focused on immediate spending controls to slow the cash decline and reduce operating cost growth.

The district’s plan to tackle its deficit also includes staffing and organizational right-sizing through attrition-based reductions, which typically looks like an organization not automatically filling open positions left from retirements and normal employee turnover.

The district also took into consideration program sustainability decisions to identify programs that may duplicate others or that are smaller scale programs that come with higher pupil costs, and then evaluate consolidation options.

“In response, district leaders focused on reducing expenditures, aligning resources with strategic priorities and developing long-term sustainability strategies,“ Hill said. ”While the financial outlook is serious, this work reflects a proactive approach to ensure fiscal responsibility and continued support for students and staff.”

The forecasted cash balance for 2025-29 is expected to decline, with $67.6 million in 2025 and negative $17.5 million by 2029, according to the most recent available five-year forecast from 2024.

“The estimated cash balance for FY26 is $60 million. The projected decrease without intervention is due to rising expenditures and decreasing revenue,” Hill said.

Hill said addressing a deficit “of this nature is not immediate.”

“It requires careful planning, board action and time to make difficult decisions that responsibly align staffing, programs and resources with available funding while minimizing disruption to students and operations,” he said.

“Now that the district is in FY26, those adjustments are actively being implemented with the goal of restoring structural balance and eliminating deficit spending going forward.”

Closing SOI

The decision to close SOI was based on reduced state and federal funding, as well as the overlap in services between Springfield High School and SOI.

Springfield relies on the state for 70% of its revenue, Hill said. Since the state has not fully funded the Fair School Funding Plan (FSFP), the district is underfunded by an estimated $7 million, and recent legislation has cut $2.6 million annually in Supplemental Targeted Assistance. There are also several property tax reforms being proposed that could impact local revenues, and revenue from the state fluctuates with enrollment.

“Without full state support, local districts like Springfield are left to absorb rising costs on their own,” he said.

An internal fiscal review identified that SOI has an average per-pupil operating cost of roughly $23,000 per student, which is more than double the districtwide average of about $11,000 in all other buildings, due to fixed staffing, transportation and facility expenses being spread across a much smaller student population.

For the current year, the total annual cost for operating SOI is $2.3 million, which includes almost $550,000 in operating expenses and $1.8 million in total staffing costs for the program, according to Hill.

SOI does not rely on a school levy and the last new money operating levy was passed in 2006. Hill said because of property valuations being lower than average, the district raises only $118 per pupil for each mill of property tax.

“To put this in perspective, an 8-mill levy would generate enough funds to cover only about one month of the district’s operating costs,” he said.

Next steps

Closing and consolidating SOI was only one component of a broader, multi-year fiscal correction plan, Hill said, and it is not the only action taken to address the district’s financial challenges.

The district established a fiscal year 2027 “expenditure reduction target” plan that’s structured across several areas to help generate recurring annual savings.

From the district’s standpoint, Hill said this approach reflects “responsible financial stewardship” because it addresses deficit spending through multiple levers rather than a single decision, prioritizes long-term sustainability and looks to protect classroom instruction while meeting statutory solvency requirements.

“Consolidating SOI was one necessary action within a much larger framework aimed at restoring fiscal stability for the entire district — not an isolated or singular response to the financial challenges identified in the forecast,” he said.

Hill said a decision regarding the future of the use of the SOI facility will be made in consultation with the school board.