Kelly Kluttz told the Charlotte-Mecklenburg Board of Education on Monday that the district budgeted a 3 percent salary increase for next year. Bills currently moving through the North Carolina General Assembly propose up to 9 percent.
The gap between those two numbers is the reason CMS cut 26 central-office positions and set aside $6.6 million as a hedge — and Kluttz, the district's chief financial officer, told the board that cushion has limits.
"I think that with the dollars that we have set aside, we could probably be okay at four and a half or five percent salary increase if the state were to pass that," Kluttz said during the May 5 budget workshop. "But anything beyond that and any change to benefits — health insurance is skyrocketing, retirement rates — all of those are factors that we have to consider."
The workshop was a continuation of a Saturday retreat between board members and Superintendent Crystal Hill's staff. The board denied Hill's $2.1 billion FY27 budget 8-1 on April 28 and directed her to present a revised version by May 12. Monday's session was the board working through the mechanics of how the money actually moves — and where it breaks.
The split that creates the risk
The underlying problem is structural. North Carolina has not passed a state budget. CMS built its spending plan around a 3 percent state-driven raise because that is what historical trends supported when the budget was drafted. But Kluttz told the board the current legislative environment looks different.
"If you're looking at the bills that are coming out right now, those pay increases are high," she said. "I assume trying to make up for the current year that we're in."
If the General Assembly passes a 9 percent raise, the state covers the increase for state-funded employees. But 35 percent of CMS employees are funded by local dollars, and another 6 percent are funded by federal dollars. For those workers, the state sends nothing.
"The 35 percent that are funded local and the 6 percent that are funded federal, we will not receive an additional allocation," Kluttz said. "So we will have to go into our current budget and we will have to cut things in order to be able to fund those employees."
The reason is equity, not math. A district cannot give a state-funded teacher a 9 percent raise and a locally funded counselor a 3 percent raise for doing the same work in the same building.
"There would never be a situation where you would give a local employee a 3 percent raise and a state employee 9 percent raise," Kluttz said. "So that's something we will absolutely have to cut our budget for to ensure."
The timing trap
The county adopts its budget in June. The state, by Kluttz's estimation, will not have passed one by then.
"The county does not have the ability to fund us additional dollars after they have adopted their budget," she said. "I do not anticipate that we're going to get a state budget by June. So we need to have a reserve or an ability to pay those increases."
The $6.6 million is that reserve. It came from eliminating positions the district described as trade-offs — a mix of central-office roles, pre-K facilitators, DSS liaison positions, and lunchroom and transportation monitors. If the state passes something at or below 5 percent, the money covers it. If the state passes something above that, CMS would need to find additional cuts mid-year.
And if the state passes nothing at all? The district keeps its 3 percent assumption, keeps the $6.6 million unallocated, and carries the uncertainty into the fall — when enrollment counts, staffing levels, and a continuing resolution all converge in the same budget window.
Hatch says 3 percent is not enough
Board Member Charlitta Hatch pressed the question directly before leaving the meeting for another obligation.
"Should we be projecting a 3 percent in our budget if we think this is a high probability?" she asked Kluttz after hearing the 9 percent scenario.
Later in the session, Hatch returned to the point formally. "What I'd like for my board colleagues to consider is an amendment to the three percent assumption," she said, "understanding the rationale and historical evidence for why it was that way when it was presented, but based off where we are now, considering updating that assumption because we have more information."
Chair Sneed asked the clerk to note the strategy adjustment. The board did not vote on it Monday — but the revised budget is due May 12, and the question of whether to budget above 3 percent is now on the table.
What the supplement structure protects
One favorable detail Kluttz shared: CMS designed its local teacher supplement as a flat dollar amount, not a percentage of base salary. A beginning teacher making $41,000 from the state receives roughly $8,000 in local supplement regardless of what the state does to the base.
"We are just very intentional about when we apply an increase to the supplement," Kluttz said. "It is not a direct correlation to the salary base."
That means a 9 percent state raise does not automatically inflate the county's supplement obligation — unlike districts that built their supplements as percentages. It limits the financial exposure on the county side to the roughly 2,700 locally funded positions, not the full 17,700-employee payroll.
What comes next
The board meets May 12 to receive Hill's revised budget and hold a public hearing on the Program Choice consolidation. The $6.6 million hedge, Hatch's amendment request, and the absent state budget will all be on the table when the board takes its next vote.
The state General Assembly has not passed a budget since 2024. CMS is planning for next year without knowing what Raleigh will pay its teachers — and setting aside $6.6 million in hopes that it is enough.
Related coverage:
- The State Funds 78 Percent of CMS Positions. The County Fills the Gap. — The April 18 deep dive on how state and county funding split the CMS workforce.
- CMS Board Denies Hill's $2.1B Budget 8-1, Gives Her Two Weeks Without Saying What to Change — The April 28 vote that sent the budget back.
The Charlotte-Mecklenburg Board of Education meets next on May 12.