Dominic Satania, presenting the draft budget, told the board the district’s proposed 2025–26 revenues include a sizeable increase in the state equalization guarantee (SEG) and a mixed picture for federal and tribal grants.

Satania said SEG (the district’s primary operational fund) will increase year over year — he cited a 22% rise and presented a figure of about $76.8 million in SEG for the coming year — which staff attribute to formula changes and an increased base unit. The presentation also showed the SEG-supported staffing level and expenditures: the 11,000 operational fund totals were reported in the presentation as about $76,758,000 and were associated with roughly 661 full-time-equivalent positions funded from SEG.

At the same time, the district faces reductions and uncertainty in several grant-funded programs. Staff reported the ARP ESSER pandemic funds have been spent down and will not continue; Title I and special-education (IDEA) allocations showed decreases; and local federal grants exhibited variation year to year depending on award and carryover. In one large change, Johnson O’Malley (JOM) funding the district previously budgeted at roughly $544,000 was reduced to about $32,000 — a drop the presenter characterized as approximately 94%. Presenters and board members discussed Navajo Nation decisions affecting JOM awards, the federal-level reductions that contributed and the possibility of appeals or additional funds through continuing resolutions; staff said Navajo Nation officials were pursuing potential remedies and the district had been advised of both an appeal process and other Navajo-level options.

Satania highlighted other revenue movements: universal free-lunch funds rose in the budget (the single-page summary showed a large increase, from roughly $45,000 to $300,000 in one line), while Medicaid and some federal categorical funds showed declines. He also described the district’s effort to consolidate many FTEs into the SEG fund in order to improve transparency and long-term budget monitoring.

On capital planning, staff reported the district set aside $15 million under Impact Aid (capital outlay) to demonstrate to the Public School Facilities Authority (PSFA) that the district has funds available to begin projects such as Newcomb Elementary. Staff said the PSFA requires demonstration of available local matching or set-aside funds before state capital dollars will be released; the $15 million was presented as a planned set-aside in the proposed budget.

The board asked detailed questions about specific grants, program distributions and carryover: a zero amount for the education-for-homeless grant (McKinney-Vento) on the single-page summary prompted staff to explain that the Kellogg-related funds and other summer/supplemental items were shown elsewhere in the packet; the Carl Perkins redistribution and CTE funding were discussed and staff noted a recent Perkins/Next Generation grant was awarded to fund 10 programs of study, including CTE expansion and middle-school pathways. Staff also described reductions in some accounts tied to shifting federal priorities and carryover exhaustion.

Board members discussed timing: staff told the board they would present a consolidated final budget for approval at the regular board meeting on Tuesday; the board did not approve the full budget at the work session but did approve a deposit memo requested by the Public Education Department as an interim administrative item. The deposit memo vote was moved, seconded and approved in open session during the work session (the presenter said earlier that the full budget approval would be scheduled for the next regular meeting). Staff and board members said they would continue follow-up on Johnson O’Malley appeals, monitor Impact Aid and federal grant notices, and report any changes back to the board.

No further line-item budget votes were taken at the work session; the board scheduled formal action on the full budget packet for the next regular meeting and requested additional detail on school-level spend-downs and program distributions before final approval.