The Okaloosa County School District is preparing for what Superintendent Marcus Chambers called “hard decisions” as enrollment continues to decline and nearly $43 million in funding flows through the district to families using state scholarship programs.

• During Monday’s school board workshop, Chambers presented data showing current district enrollment at 27,829 students — a number lower than the start of the school year — and outlined a 10-year forecast projecting continued decline in much of the county.

“This is where we are in public education in Florida, across the nation. It’s reality,” Chambers said. “And if we do not make adjustments, then that reality becomes even more negative.”

Chambers told board members he would present a specific recommendation at the January 12 board meeting to address the challenges, though he did not detail what that recommendation would include.

$43 million in scholarship funding

The district currently has 4,935 students receiving state scholarships in Okaloosa County. Of those, approximately 3,300 are Family Empowerment Scholarship recipients, representing nearly $30 million that passes through the district’s budget. An additional 1,633 students receive Personnel Education Program scholarships, totaling about $13 million.

Chambers noted that the 3,300 FES scholarship recipients exceeds the district’s anticipated FTE projection shortfall with approximately three-quarters of those scholarship recipients never attended Okaloosa County schools.

• “The vast majority of the students receiving the FES scholarship, factually, data-wise, never attended Okaloosa County schools,” Chambers said.

The number prompted pointed questions from board member Tim Bryant, who asked how these students are being tracked and where the money is going if the majority of scholarship recipients never attended district schools.

Board Chairwoman Linda Evanchyk expressed frustration about accountability in the scholarship program.

“The amount of money that is not accounted for by our state in this program — it’s appalling,” Evanchyk said. “I know how this board and our district has to be accountable for every penny that is used. I’m just appalled at the shocking amount of money that has sifted through this program with no accountability.”

A tale of two counties

The enrollment data also showed what Chambers described as “the tale of two counties” — growth in the northern part of Okaloosa County contrasted with decline in central and southern areas.

Looking at a nearly 11-year span from 2014-2015 to present, elementary, middle and high schools in the Crestview area have seen enrollment increases. Schools in Fort Walton Beach have seen decreases at all levels. The Niceville area shows mixed results, with elementary declining but middle and high school enrollment increasing. The Destin area has remained fairly the same.

The district’s 10-year forecast, developed with help from an outside firm that assisted with north end rezoning, projects these trends will continue in opposite directions through 2034.

• For elementary schools, the north end is expected to gain approximately 851 students while areas south of the Shoal River are projected to lose 1,455 students — resulting in a net loss of 604 elementary students district-wide.
• At the middle school level, the south is projected to lose 902 students while growth in the north partially offsets those losses, resulting in a net loss of 452 students district-wide.
• For high schools, the south is projected to lose more than 1,000 students while northern growth again partially offsets the decline, resulting in a net loss of 707 students district-wide.

“We don’t get money for empty seats, period,” Dr. Lamar White said. “We’re funded based on enrollment.”

Multiple contributing factors

Chambers emphasized that enrollment decline stems from multiple factors beyond the scholarship program.

The district presented data showing declining birth rates across Okaloosa County, with fertility rates falling below the 1.0 replacement level in many zip codes. Assistant Superintendent John Spolski noted that while the southern United States is experiencing population growth, much of that growth comes from retirees rather than families with children.

“I made a list of 15 of my neighbors,” Spolski said. “One of them, one house of those 15 houses, has three children. The rest of them have no school-aged children.”

• Spolski, who lives in Fort Walton Beach, added: “I hate to say this, but at 56 years old, I’m the youngest one on my street.”

Board member Brett Hinely referenced a presentation from a recent conference about nationwide demographic trends.

“The south is the only area in this country that is having a population increase,” Hinely said. “But it’s not the kids.”

Affordable housing also emerged as a significant factor. Chambers said the district participates in a county-wide affordable housing initiative led by the Greater Fort Walton Beach Chamber of Commerce, which includes elected officials and community leaders.

“Affordable housing here in Okaloosa and across the state is also an impact of hiring teachers,” Chambers noted.

Legislative efforts

Chambers praised Sen. Don Gaetz’s Senate Bill 318, which would move Family Empowerment Scholarship funding into a separate categorical fund outside the formula used to calculate public school funding.

• The bill addresses findings from a state auditor’s report that identified three weaknesses: inability to track where students are located, lack of financial accountability for scholarship dollars, and difficulty accurately predicting enrollment.

“I’m very grateful that he’s the one chosen to dig in,” Chambers said of Gaetz, a former Okaloosa County Superintendent. “As you know, the former superintendent — understands public schools, understands funding, and understands this dynamic.”

The legislation would require monthly monitoring of scholarship recipients to ensure students are not receiving scholarships while also attending public schools. Current monitoring occurs quarterly.

Chambers noted that 45 of Florida’s 67 school districts are experiencing enrollment decline, according to information presented during legislative discussions of the bill.

White cautioned that even if the legislation passes, it would not solve the district’s immediate challenges.

• “We can only hope that this passes the legislature and is signed into law by the governor,” White said. “But in the interim, we still have a significant enrollment decline, which means that we have a significant loss of funds.”

Co-location concerns

Chambers raised concerns about a provision in state law that allows charter schools to request space in public schools with empty seats — a process called co-location.

“Not only do you not get funded for empty seats, a charter school can come in and take those empty seats,” Chambers said. “And who do you think pays for that? The charter schools do not pay for that.”

The district would be responsible for custodial services, administrative costs, potential transportation and maintaining the empty classrooms, he said.

Complex funding explained

Board member Parker Destin spoke about the complexity of school finance and how the different funding categories can create confusion.

• He noted that some residents may not realize the school board and county commission are separate entities, or that school funding is divided into restricted categories that cannot be mixed.

Destin said voters sometimes question why the district appears to have money for some projects but faces financial strain in other areas — a reasonable question given how complicated the funding structure is.

Chambers explained that school districts operate with separate funding streams. Capital funds — generated partly through the half-cent sales tax approved by voters — can only be used for construction, maintenance, technology, buses and certain limited personnel costs. General funds pay for teacher salaries, benefits, instructional materials, utilities and most operational expenses.

“We cannot use capital dollars to do teacher raises,” Chambers said. “Can’t do that.”

Board member Brett Hinely emphasized that these restrictions are not choices made by the local school board.

• “When you say we can’t, that means we can’t by Florida statute,” Hinely said. “So it’s not [that] we’re deciding it. Florida statute says we can’t take that money and mix it with other money.”

The distinction matters because while the district has made significant capital improvements — including nearly 120 new buses, classroom additions, new cafeterias, security upgrades and facility repairs — those same dollars cannot address operational budget pressures, according to the district.

“I’d love to be able to take as much on the capital side and go ahead and honor folks the way that they should be honored,” Chambers said. “But you don’t have the ability to do that.”

‘The Perfect Storm’

Chambers compared the current situation facing public education to the film “The Perfect Storm.”

“That’s where public education is right now,” he said. “But again, it’s not a whining thing. This is where we are. Just like we got through COVID, we will get through this as well, but it’s going to be hard decisions. It’s going to take leadership. It’s going to truly take team OCSD to be able to do all this.”

When asked about the possibility of seeking a millage increase from voters, Chambers said the district must first demonstrate fiscal responsibility.

• “First of all, we have to handle our side,” Chambers said. “And if we have seats that are open at multiple schools, we have to be able to handle our business first.”

Destin warned that additional financial pressures could emerge from ongoing discussions about property tax reform at the state level. He noted that the county currently funds half of the approximately $8 million cost for school resource officers through the Sheriff’s office budget.

“If the county commission gets beat up too hard on property tax reform, I bet you they might want to talk to us about how we’ll have to carry more of an SRO budget,” Destin said. “And where is that money going to come from?”

Marketing public schools

Hinely said the district needs to adopt a marketing mindset to compete for students.

“In the old days, you had your public schools. You didn’t have to go sell your public schools,” Hinely said. “We have to sell it. And the way we sell it is by our accomplishments — all the good things we’re doing and the things that other schools, private and charter schools, can’t get. The CTE, the higher level of stuff.”

Chambers acknowledged family choice “is not going anywhere” even under the proposed legislation.

• “Family choice is there. Family choice is not going anywhere. Even in this bill, family choice will be alive and well,” Chambers said. “So we have to continue to strive to raise the bar here in Okaloosa.”

Evanchyk emphasized that the district continues to rank among the top in the state while offering programs that distinguish it from alternatives.

“Look where we’ve come in our CTE programs and what we’re offering our students — it’s night and day from when I went to high school in this district,” Evanchyk said.

Spolski said the district would begin a comprehensive communication effort starting this week, reaching out to county commissioners, chambers of commerce, military liaisons and business leaders to explain the district’s financial position.