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Money woes – Revenue shortfalls, expense overages put SFSD in turmoil

By Stephen Floyd

Officials with the Silver Falls School District (SFSD) believe workforce reductions are necessary as they learn a projected budget deficit may be greater than initially estimated.

On March 21 during a special meeting of the board, Director of Finance Kim Doud said they were learning about revenue shortfalls that could deepen an original deficit projection of $825,000.

Shesaid, when that number was presented, it was assumed revenue would remain close to budget. The district has since learned a state grant for special education could be short by as much as $600,000, and federal pandemic relief dollars could be short $1.1 million.

Doud said they are also discovering potential revenue overages that could help balance out the shortfalls. She said a more complete report of net revenue will be provided at the board’s April 8 meeting.

Given the possibility of a deeper deficit, Doud said the board should be prepared to take action beyond the bridge loan they have been discussing. The loan, a tax anticipation note (TAN), would borrow against tax revenue the district expects at the end of 2024. The board has been told that without  the TAN the district may not make June payroll.

“We do not have any other option right now besides this tax anticipation note, but to be clear this tax anticipation note is not the only action that needs to take place,” said Doud. “We cannot right this ship without additional actions.”

Acting Superintendent Dan Busch said additional action could include layoffs and furlough days. He said there is already language in union contracts defining how layoffs would be conducted, while furloughs would require conversations with union representatives to define terms and expectations.

“Furloughs typically happen because [unions] want to partner to protect jobs,” Busch explained.

This is a reversal from the board budget discussion in late 2023, when Busch and former Superintendent Scott Drue said layoffs and furlough days would not be pursued. At the time they said a hiring freeze was in place to help avoid involuntary workforce reductions.

Doud said the right combination of a TAN and potential workforce reductions should leave the district with enough cash in the fall to ensure payroll obligations. She said the budget for the next school year will need to be tight and closely monitored.

Doud also noted the projected deficit only applies to the general fund. Accounts related to student fundraising and similar programs have not been affected.

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