Shakopee schools present FY26 preliminary budget showing planned use of reserves to hold fund balance at 10%

Shakopee Public School District finance staff presented a preliminary fiscal 2026 executive summary to the school board on May 12, saying the district expects to use a portion of restricted and assigned fund balances to keep the unassigned general fund balance near its 10% policy level while noting structural budget shortfalls beginning in fiscal 2027.

Director of Finance and Operations Zolmanazi told the board that the district—s proposed budget shows total revenues of $167,326,700 and total expenditures of $174,016,805 for fiscal 2026. "Our unassigned fund balance in the general fund is projected to end next year at 13,180,000.00, which is good for 10%," Zolmanazi said, adding that doing so requires planned use of restricted and assigned fund balances.

The document reviewed several assumptions used in building the budget: an operating levy authority of $1,371.84 per pupil for taxes payable 2025; a 2.34% inflation factor tied to the operating levy cap; a state aid formula increase of 2.74% that sets the statewide formula allowance at $7,281 per pupil; and an enrollment projection of 7,457 students for the coming year, a decline of 82 students (about 1%). The presenter told the board the district has seen roughly a 9% enrollment decline since fiscal 2020, driven primarily by declining birth rates in Scott County.

Zolmanazi walked the board through fund-level projections in the packet. The general fund revenue line is shown at about $125.5 million with expenditures of about $132.2 million; food service is projected to begin the year with a fund balance just under $2.9 million but to run a slight deficit under conservative assumptions; the internal service (self-funded health and dental) fund is projected to end the year near $1.43 million; and the OPEB/trust account is projected near $5.7 million. The presenter highlighted two significant upcoming debt "drops" (sizable principal payments) in fiscal 2027 and again in 2031 that will affect the district's debt service planning.

Board members asked follow-up questions about the timing and size of the debt drops, historic savings from recent refundings, and how one-time or assigned funds (for curriculum purchases and operating capital) are being used to smooth the FY26 budget. Zolmanazi said the operating capital fund includes a planned $1.8 million spend-down next year.

Superintendent and finance staff reiterated that the district—s FY26 budget is balanced as proposed but that continuing the current set of services into FY27 without further revenue or cuts creates a structural deficit. During a later financial update the superintendent and other administrators told the board that closing the FY27 gap will require a mix of permanent budget reductions, revenue options, or both, and that the district's ability to avoid large service reductions will be limited by the fact that roughly 90% of general fund spending goes to salaries and benefits.

The board was reminded the document is available for review and that staff expect few changes before the June 23 board action on the budget; Zolmanazi asked trustees to submit questions in advance. The presenter also noted an enrollment study by Hazel Reinhart will be delivered in June and could inform final assumptions.

Looking ahead, staff said they will present more detailed scenarios for FY27 as they refine revenue and expenditure projections and seek direction from the board on trade-offs between program reductions and revenue options.

Less-critical details: the presentation packet includes 44 pages of schedules and explanatory material (enrollment history, fund summaries, debt schedules and the budget calendar); staff encouraged trustees to review pages 3, 5, 9, 15

and 25

through 35 for fund-by-fund detail before the June review.