Lee's Summit R-VII Treasurer Dr. Herzog told the finance committee on Nov. 17 that the district is receiving state aid at levels below the budgeted adequacy target and that the trend could produce a multimillion-dollar shortfall.

"This last month the state aid payment was based on $6,900 per student," Herzog said, compared with a budgeted figure of $7,145 per pupil. He estimated that if the current dollar amount were to continue for the fiscal year, the district would receive about $4.1 million less in state revenue than budgeted. If statewide payments dropped a further 6 percent, losses could approach $7 million, he said.

Why it matters: the district relies heavily on local and state tax revenues and uses its fund balance to carry operations through months when tax receipts are delayed. Herzog said the district's operating fund balance is currently about $30.3 million, roughly 10.78 percent of annual expenditures, and that the board has set an end-of-year fund-balance goal near 25 percent.

How the district would respond: Herzog said any revenue shortfall would first be covered by reserves and that staff will consider budget amendments once county tax receipts are clearer. "Any revenue shortfall that we receive throughout the year . . . we're going to end up paying out of our reserve," he said. He recommended waiting until December or into early spring (after Jackson County receipts and other indicators) before making large revenue assumptions in budget amendments.

Investment and liquidity plan: to maintain access to cash during the district's lowest months, Herzog said he is considering moving term investments maturing in 2026 into liquid accounts. He said about $8.5 million of term investments mature in 2026 and that shifting roughly $8 million from term to liquid accounts would improve liquidity while costing only a modest reduction in expected yield. "The point of our investment strategy and structure first and foremost is safety of our dollars, then liquidity, and then return," he said.

Next steps: staff will monitor state aid and county tax receipts closely, and the board may consider budget amendments in early 2026 if necessary. Herzog said the district has the reserves to manage the shortfall but that doing so would require difficult trade-offs on future revenues and expenditures.