OPS budget drops tax levy and gives raises, but dwindling cash reserves causes concern

During Thursday’s school board meeting, members approved the 2024-25 budget, which will come with a levy of $1.107 per $100 of assessed value, a decrease of nearly 11 cents. The new levy will cost a homeowner of a $200,000 home about $2,214 per year.

Since the 2019-20 budget, the district’s tax rate has gone down nearly 14 cents. This year’s budget involves a property tax request of $381.1 million, a decrease of more than $8 million from the 2023-24 school year.

It also includes a general fund of $812 million, which includes the $85 million increase in staff salaries. The district’s total budget for the 2024-25 school year is about $1.2 billion.

In January, the district raised pay for special education and paraprofessional staff in an effort to reduce shortages in those areas. In May, district officials announced another pay raise worth $34.8 million for a variety of employee groups.

These changes came nearly a year after the board passed a substantial boost in teacher compensation, including a base salary increase of $7,200 over the next three years to compensate teachers for the heavy burden of work due to staff shortages.

OPS is also starting the school year with 171 more teachers than expected, said Shane Rhian, the district’s chief financial officer. This caused more of the general fund to be used for teacher salaries for the 2024-25 school year.

“The proposed budget demonstrates the board’s commitment to the district’s most valuable resource: its staff,” Rhian said. “One hundred percent of the overall general fund budget increase is going to staff salaries and benefits, which has had a direct and immediate impact on ongoing staff recruitment and retention efforts.”

During Thursday’s meeting, Rhian also detailed concerns with the district’s budget in the future.

OPS currently has the maximum amount of money allowed in its reserves — a limit set at 20% of its general fund budget — around $137.8 million. District officials have forecast reserves dropping to 1.5% of the general fund budget — roughly $13 million — by 2029.

Rhian said this is partly because the district won’t be able to afford continuing initiatives and services implemented with federal COVID-19 relief money, which expires on Sept. 30.

Rhian said the district will have to use “thoughtful planning and consideration” to figure out how to spend less in the future to continue services, such as mental health support, professional development, tutoring and more. For years, Rhian said OPS has also added initiatives without sunsetting ones that are no longer needed, but he didn’t specify what initiatives should be cut in the future.