LINN — Linn R-2 Superintendent Bob James told board members on Thursday that continued uncertainty in state funding and mounting financial pressure across all three major revenue sources are driving the district’s proposed 50-cent operating levy increase on the April 7 ballot.

“It’s just confirmation of what I was saying last year,” James said. “We can’t count on state funding.”

Before the discussion began on Thursday, James read a written open-forum statement submitted by former teacher and board member Larry Hunt, who raised concerns about both the district’s financial future and the broader impact of potential state funding cuts.

Hunt wrote, “25 years ago, Linn R-2 had a brand-new building, and our school was almost destroyed internally by a superintendent and school board. In my opinion, damage done then is still felt in our district today.

“We survived. Today, Linn R-2 has a new building, and the threat is from outside in the form of the state of Missouri to our students, faculty, and community.

“If the levy does not pass in April and the state goes through with massive cuts to public education, what is the plan of survival for our students’ education, faculty and staff, and continuing to educate our students?

What action is planned to fight the state’s plan from the school board and other educational organizations?”

Board President Dr. Shawn Strong said the district had reviewed Hunt’s comments in advance and used them to frame its response to the broader financial outlook facing the district.

“The state of Missouri has a $57 billion budget,” Dr. Shawn Strong said. “Of that, about only $7 billion is discretionary, and over half of that is either in Higher Ed or elementary and secondary education. If you look at what they’re anticipating for needed cuts to balance the budget over the next three years — and it varies widely, somewhere between $1.5 and $2 billion — they’re going to be looking to do that across the board on the discretionary budget, and it’s going to take 15 to 20% cuts.

“I’d be shocked if we don’t see that over the next year or two,” Dr. Strong continued. “And I think we’re already seeing some of that, even this year, with some withholds and that type of thing. So I do think things are going to get tough and we’re going to be more dependent on local support. There’s no doubt about it when you look at the size of cuts.”

Dr. Strong noted that things were probably different when the district went through its painful issues. “I wasn’t around 25 years ago, so I really haven’t talked to anybody about specifically what happened; I’ve heard grumblings about it,” he said. “And I suspect the difference this time is we have a building that’s significantly under budget. We’re not going over budget with our building project. We don’t have the burden of overspending on a building.

“And then I’d say the other thing we have is (strong) district leadership — we have a superintendent that’s a numbers guy,” Dr. Strong said. “I mean, Bob loves math, and he knows the budget. He talks budget all day, and he enjoys it.

“I don’t know anything about the superintendent at that point in time, but I will put Bob’s ability to manage budgets against any superintendent in the state,” Dr. Strong said emphatically. “We have an extreme amount of confidence there, but at the end of the day, I know our commitment is to continue the operations of Linn R-2 regardless of the external challenges. Instructional services and student safety are always going to be number one and two above everything else. And beyond that, you look at sort of where you can cut that doesn’t impact the educational experience. I’ve talked to Bob over the last couple of weeks, and he’s already starting to talk about where we could prepare for the storm that we think is coming.

“So I’m very confident that our reaction — I won’t say reactionary — but most important, we know that academics and safety for our students are number one,” Dr. Strong continued. “But then you start to look at things like programming — some of the things we’re able to do for students outside of just what’s happening in the classroom — you have to start to look at those types of things.”

Dr. Strong added that while the future is uncertain, the district faces two choices: “We can ignore it and be shocked by it in the next couple of years, or we can start to address it now, which is what we’re doing,” he said. “With regard to what we’re doing about it at a state level — I mean, coming from across the street (at State Tech, where Dr. Strong serves as president), I know we pay several lobbyists a whole lot of money, just as all the schools do. They do it through the Missouri School Boards’ Association, the Missouri Association of School Administrators, and the Missouri NEA — all have lobbyists, and they’re all fighting the fight for us in Jeff City. And I know Bob also talks to our local senator and representative on a fairly regular basis, so we’re doing, I would like to think, everything we can to advocate for Linn R-2.”

Having said that, Dr. Strong added that from a macro-level perspective, there’s not much any one school can do.  “But when you have these other organizations working on our behalf, it can be effective,” he concluded.

MISSOURI’S EDUCATION FUNDING SHORTAGE

James pointed to repeated shortfalls in the state’s foundation formula, explaining that even when full funding is approved through the budget and appropriations process, districts are not guaranteed to receive that amount.

“They budgeted full funding of the formula for this year,” James said. “It even made it through appropriations. But that’s not what we’re getting.”

The district budgeted for $7,145 per student, but is currently receiving approximately $6,900 per student — a gap James said was not confirmed until March. “We go three-quarters of the way through our budget year before we even find out if we’re going to get paid all of the money that was budgeted,” he said.

James confirmed that the district will finish the current year at approximately $6,900 per student, rather than the amount approved through the state process, resulting in a six-figure impact during the current budget cycle.

“That is not atypical,” James said. “They’ll fund at a budget rate and then hold back … but they’re going to finish the year out at $6,900.43.”

That discrepancy is expected to continue.

“They’re saying that next year we’re predicting that it will be $6,900 for all of next year,” James said. “But most likely some number below that.”

James estimated that a reduction from full funding to roughly $6,700 per student would cost the district approximately $300,000 annually, an amount that would significantly impact the district’s financial position.

“For us, that’s about $300,000 in lost revenue,” he said, noting each percentage point represents $75,000. “That’s four fund balance points.”

The district currently projects ending the year with a fund balance between 32 and 34 percent. However, he said, continued annual losses could quickly erode that cushion.

“If we lose four percent per year for the next two years, that’s eight percent,” James said. “So without mismanaging our money at all, we’ll go from about 33 percent fund balance to 25 percent — which is just five percent over the state’s threshold for a healthy fund balance.”

James said the issue is compounded by inflation and flat federal funding, which reduces purchasing power even when dollar amounts remain unchanged.

“If you get the same amount of money, it doesn’t have the same buying power a year later,” he said. “We can only buy about 97 cents’ worth of goods with that same dollar.”

At the same time, he said the district is facing potential reductions across all three primary funding streams — federal, state, and local — creating what he described as a multi-directional financial strain.

“Federal funding is only about 10% of our budget,” James said. “The other 90% is being reduced both from the state level and through legislation impacting local taxes.”

James also noted potential changes to property tax structures, including adjustments to minimum operating levies and assessed valuation, which could reduce the district’s ability to capture growth revenue over time.

“When you lose $300,000 on the state side, and then you’ve got reductions federally and uncertainty with property taxes, we could be going backwards $400,000 a year,” he said. “That is not out of the question.”

The proposed 50-cent levy increase is projected to generate approximately $475,000 annually, which James emphasized would offset losses rather than create a surplus.

“We’re definitely not getting rich off of the operating levy,” he said. “It is just going to cover the costs of doing business in this current financial climate.”

He added that a portion of the revenue would be used to fund a full-time campus police officer, further narrowing the net financial impact.

“By the time we pay a campus police officer to be there full-time, we’re looking at breaking even,” James said, noting that in addition to reduced foundation formula funding, transportation reimbursement uncertainty and changes to weighted funding categories are key factors shaping the 2026-27 budget outlook.

He also said that increased expenditures tied to special education staffing, student needs, and efforts to move the district’s base teacher salary above $40,000.

James added that the financial strain is partly the result of state policy decisions that have increased required spending without providing consistent funding.

“They passed the bill to force us to go to the minimum base salary, but they haven’t funded it even one year,” he said.

James also pointed to broader state budget pressures, including declining tobacco revenue, underperforming gambling revenue, and the expiration of federal COVID-era funding.

“Not a district in the state of Missouri has received a dime from gambling,” James said. “And we’re not predicted to receive a dime for the next couple of years.”

At the same time, he said, proposed legislation affecting property tax revenue could further limit local funding flexibility.

“You force expenditures on a school district, and then you restrict revenues,” James said. “In the military, we call that a pincer move.”

He said the district’s financial projections have remained consistent over the past several years, with current conditions aligning with earlier forecasts.

“A year ago, we were looking out two, three, five years into the future,” James said. “We’re just one more year down the road, and our predictions are proving to be accurate.”

James said the district will continue providing financial information to the public ahead of the vote, including two upcoming presentations scheduled for March 30 at 6 p.m. and April 3 at 5 p.m. at the elementary multi-purpose room.

“I’ll be glad to show them absolutely every bit of our finances that they may be interested in,” he said.

The April 7 ballot also includes three open seats on the Linn R-2 Board of Education, with five candidates seeking election. Each is featured in this week’s paper, and a candidate forum is scheduled for 7 p.m. on Wednesday, April 1, at the Osage County Community Center, hosted by the U.D.