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DeKalb presents FY26 budget pressures, SPLOST forecasts and borrowing options including COPs
Summary
CFO staff briefed the board on FY26 budget drivers: state pension and health‑insurance increases, reduced salary‑savings due to lower vacancies, and SPLOST project shortfalls. Staff outlined alternatives — interfund loans, bonds and certificates of participation (COPs) — and urged cautious millage decisions ahead of June adoption.
District finance staff presented the DeKalb County School District’s preliminary fiscal picture for fiscal 2026 and reviewed the SPLOST (special purpose local option sales tax) program forecast and alternative capital‑funding options on May 1.
Key budget pressures: Staff said the district must absorb a roughly $24.5 million increase in employer health insurance costs (state SHBP rate changes) and an estimated $10 million rise from the Teachers Retirement System (TRS) employer contribution. Lower projected salary savings — because fewer positions are expected to remain vacant as hiring tightens — add roughly $11 million of pressure.
SPLOST and program management: The presentation described a conservative SPLOST 6 planning approach: district staff will add project budgets to the plan only after the board’s approval of individual projects, and managers will delay contract awards until revenues are confirmed. Staff said this approach reduces the chance that the district will be stuck with commitments that exceed collections, but a number of previously planned projects remain unfunded (presented on a green/yellow/red chart). Finance staff and the program manager HPM are updating priorities and will provide monthly cash‑flow and commitment reports to the board.
Borrowing options: Finance staff summarized three alternatives to fill capital funding gaps: - Interfund (general‑fund) loans to bridge shortfalls; cheaper (no external interest), but constrained by available fund balance and risk ongoing general‑fund pressure. - General obligation or revenue bonds (voter‑approved) that can raise larger sums but require a public referendum. - Certificates of participation (COPs) as a borrowing tool that does not require voter approval but typically raises less and carries interest costs; staff provided example amortizations for a hypothetical $200 million COP at 10‑, 15‑ and 20‑year terms and showed the equivalent millage impact.
Fiscal picture and timing: Staff estimated FY26 revenues conservatively (e.g., a 4% local digest increase with a half‑mill rollback for taxpayers) and proposed to tentatively adopt a budget on May 12 to permit required public notices and hearings. Staff warned that decisions about using fund balance, borrowings or tax‑rate reductions will affect the district’s multi‑year fiscal health and asked the board to weigh short‑term relief against long‑term sustainability.
Board questions and next steps: Members pressed for monthly SPLOST cash‑flow updates and a clearer list for any projects moved from SPLOST into bond or COP funding. Finance leaders agreed to provide a shared Q&A spreadsheet, followup materials and a series of mini‑sessions to finalize recommendations before May 12.
