RO Board discusses cost-cutting options

The Red Oak School District is continuing to look for cost saving options as it prepares to move into the 2025-26 school year.
Superintendent Ron Lorenz said the district and administration are remaining steadfast in being transparent about some of the challenges that the district is facing. Primarily, the district has to craft a balanced budget after losing the enrollment of nearly 87 students.
“That equates to a loss of about $700,000, and I don’t care what organization you’re in, you lose $700,000, and you’re going to have to figure some things out. School districts are prohibited from operating at a deficit, so we have to identify ways to increase revenue and limit our spending. And I know we’ve gone to great lengths to try to address that revenue piece,” advised Lorenz. We’ve had a lot of conversation about partnering with Stellar Virtual. We’ve had a lot of conversation about seeking sharing opportunities and those kinds of things, but the reality is now we have to look at the need to limit our spending as well.”
Lorenz added the financial impact that the enrollment decline is having will have a ripple effect.
“It’s going to affect our property tax rates. It’s going to affect our staffing levels. It’s going to affect our course offerings. It’s going to affect district resources, supplemental programs, and I think we have to face those things head on. Our property tax rates are going to increase as much as $0.38 per thousand. That gets us to the $15.47 per thousand mark. That’s primarily due to the state budget guarantee. Our total levy rate includes a $1.32 increase, that’s called the regular program budget adjustment. That’s in order to fulfill that budget guarantee, that all comes from property taxes,” commented Lorenz
Those factors, Lorenz said, have resulted in the district needing to be more flexible and agile as it has crafted this budget, and if they had not raised the income surtax, the property tax levy would have been even higher. Administratively, Lorenz said they have been actively seeking ways to limit expenditures, looking for efficiencies, looking for cost-saving measures.
“We’ve been doing that essentially since November of last year. You know that we’ve consolidated positions, categorized non-essential software subscriptions, seeing what we could live without. We’ve also sold the Bancroft and Webster buildings. We’ve terminated a lease, we’ve limited purchases of technology and other resources,” explained Lorenz. “We’ve identified discretionary programs that could potentially be cut. Ultimately those efforts aren’t enough. Since approximately 80% of our general fund is allocated salaries and benefits, we can’t have meaningful cost savings without addressing staffing levels.”
Lorenz added that while the district prefers not to eliminate any positions, it is unlikely to fill vacancies that arise from resignations.
“We may need to cut a limited number of surplus or redundant positions, but our primary approach is going to be reduction through attrition. So that’s why you will see, when we have some openings arise, we aren’t necessarily going to fill those. We are getting to the point, however, where we’ve limited as much as we can. So we’re going to have to start filling. If we have any more openings, we’re probably going to have to fill those. But everybody’s been willing to tighten their belts and take a look at how we can do that,” Lorenz stated.
Moving forward, Lorenz believes the district and the school board has to continue to identify those programs that aren’t producing meaningful outcomes and that aren’t providing a sufficient return on investment.
“A lot of programs are nice to have, but they could be considered luxuries, even where we are currently, so that’s something that we’re looking at. I also just want to say that contrary to what some have suggested, no decisions in that regard have been reached. Certainly no recommendations have been offered to the board. No board action has been taken. I know there are a lot of people that are out there talking, connecting dots that just don’t exist. So I want to be very clear on that, that we haven’t brought anything to the school board yet because we haven’t really reached those kinds of decisions.”
Lorenz advised that the administration is actively exploring ways to sustain programs and to be creative in terms of funding, and that it takes time.
“When we get into that, now you’re talking about grants, and you’re talking about negotiations, and you’re talking about finding interesting or creative solutions. I just want to reassure people that we are taking a very intentional, thoughtful process to doing this, and we have been for months, actually. The types of actions we’ve seen in our board agendas and such have been based on people’s personal resignations on their own, not by us doing anything there,” commented Lorenz.
“I think it’s a sign of the times. I know there are at least two districts of decent size that are cutting staff. We received notice from one of those districts saying we’re reducing these folks. If you have positions for them, please let us know. That’s tough for everybody. The good news is we’re not looking at cutting positions at this point. We’re still in a place where I think we’re able to absorb a lot,” said Lorenz. “We’re going to be able to rely on attrition to recoup some of those losses.”
Lorenz credited the district’s administrative team in helping in the process.
“They’re the ones that when I walk into a meeting and I tell them we’re going to have to do some things, and then I look at them and say, what’s that going to be? Every time they come with a proposal, they face the response from me that ‘No, we don’t have money for that.’ So they’ve been tremendous. They’ve been flexible. They’ve been creative in their thinking. And I give them all credit.”
Lorenz also cleared up the misconceptions around the district looking to make potential renovations while also crunching the budget.
“We have those engagements or interviews for subcommittees and there are differences between funding types and colors of money and those are apples and oranges types of conversations that we have to do a really good job of explaining so people understand that. My biggest concern is that most people are unclear in regards to fund accounting. They’re used to balancing their checkbook and they say that if I don’t have money over here, I’ll just take it from over there. It doesn’t work that way in a school. The money that we’re talking about spending in terms of renovating Inman, that’s money that we’ve been saving for years. It’s targeted funds that can only be used for such things. That cannot be used for staff,” Lorenz explained. “There may be some people that are still unclear on that, but I do think we need to be very intentional about getting that message out and reminding people. PPEL and SAVE dollars are different than the general fund. We’re not talking about using the general fund for any kind of renovations, we’re talking about PEPL and SAVE dollars.”
Lorenz added there remained legitimate security enhancements that were needed on the building and needed to be addressed as well, and were going to be critical parts of renovation designs to the building.
Also, the district reached a tentative agreement with the Red Oak Education Association on the 2025-26 master contract.
“There will be a one-year settlement where each teacher will receive a $500 salary increase and a $1,000 one-time retention bonus. Teachers who qualify for salary increases based on a new state minimum requirements will receive additional pay up to the amount necessary to meet those prescribed minimums, but they will not receive an additional retention bonus. The district will continue to pay teachers an additional $2,000 for each level of graduate credit they achieve, such as a BA plus 15, BA 30, MA 15, MA 30, as was negotiated two years ago,” stated Lorenz. “Newly hired teachers will be assigned a starting salary in accordance with state salary requirements, $50,000 for new teachers, and $62,000 for teachers with 12 years Also, the district has limited the number of contract days. Currently teachers are on a 190-day contract. The Red Oak District has agreed to a 188-day contract, which was a concession to teachers.”
Lorenz also stated that teacher contracts have been issued as well, which will help in confirming staff numbers.
“That sets the clock so we start getting a clearer sense of who is coming back, and who may not be coming back. The due date for contracts will be April 11, and that means that teachers either have to return their contract or tender a resignation by that date. If not, their continuing contract goes into effect. They’re under contract. So this is typically the time of year where people that may be thinking they’re going to go, is when we start to hear about it.”
Any future changes will be brought before the Red Oak School Board, and ongoing discussions are expected as the district continues looking at cost-cutting measures.