District 200 staff present FY26 budget, warn 5-year projection could cut fund balance without adjustments

District 200 finance staff told the Community Finance Committee on Aug. 12 that the proposed fiscal year 2026 budget would finish the year within the district’s fund-balance policy range but that longer-term projections show potential trouble unless the district pursues revenue or expenditure changes. Brian, a finance staff member who presented the budget update, said the district expects operating funds to start the year around $70,000,000, with revenues exceeding expenditures by about $5,600,000 in FY26 and transfers of $45,000,000 to nonoperating funds (about $42,000,000 for capital projects and $3,000,000 for debt service). He said the operating fund-balance at the end of FY26 is estimated at roughly $30,000,000, or about 32% of operating expenditures. The nut graf: The committee was shown two five-year projection scenarios. The "base" scenario — which carries FY26 assumptions forward with no program reductions — would push the fund balance down substantially in years four and five, in large part because of an increased baseline for special education. An "alternate" scenario that blends partial levy recapture and targeted expense reductions kept the fund balance near a 30–33% range in each projection year. Key details: Brian said local revenue estimates increased about $276,000 since June (largely from two property-insurance payments cleared after July 1), while overall revenue estimates fell about $313,000 from the June draft after re-pricing categorical state grants and adjusting federal grant expectations. A planned capital grant tied to "Project 2" was budgeted conservatively at $2,000,000 for FY26 (down from a previously shown $2,500,000) because application materials and state conversations are still in process. Special education costs drove the committee discussion. Tony, a staff member leading the financial-projections discussion, and Brian both said special education outplacement counts rose from 42 to 52 students this year, including two students requiring room-and-board placements. Brian said that change and added nursing and transportation costs raised the special-education baseline by about $2,200,000 in FY26; under the model assumptions that increase compounds across the five-year projection to roughly $11,000,000 more in cumulative expense. On options, staff presented a set of adjustments the board could consider: (1) partial recapture of levy dollars within a three‑year statutory window; (2) targeted operating reductions starting in FY27 (an illustrative $1,000,000 in FY27 ramping to $2,000,000 annually thereafter); and (3) a modification to the 10-year maintenance plan that would eliminate certain fund-balance transfers for capital in the final three years of the projection. Brian said these are examples to prompt further committee and board discussion, not formal recommendations. Committee members pressed for guardrails and clearer policy links. A committee member noted the district’s fund-balance policy target (25–50%) and several members expressed a preference for a fund balance closer to 33% to protect cash flow if county tax payments are delayed. Another member asked for a more robust debt policy and clearer monthly fund-balance forecasting to guide decisions about short-term borrowing and timing of bond sales. The meeting also addressed federal grant volatility: staff said Title II funding (about $50,000 for professional development and teacher mentoring) was reinstated after temporary federal withholding and was placed back into FY26 revenue estimates. Medicaid funding remains uncertain over the next decade, and staff said that risk is being tracked in the five-year forecast. Discussion vs. decisions: The committee received the FY26 update and five-year scenarios and provided feedback; no formal budget adoption or board vote on the scenarios occurred at the meeting. Staff said the tentative budget will be placed on public display Aug. 15 and the final budget returns to the board for adoption in September. Committee members asked staff to return with levy and recapture scenarios and with concrete expense-reduction options in upcoming meetings. Ending: Staff said they will continue to refine assumptions with department input and bring additional scenarios to the committee in October and December, including preliminary levy options and departmental ideas for savings.