Lakeville presents FY26 preliminary budget: $1.8M net revenue change, staffing and benefit cost pressures flagged

Lakeville Area Schools finance officials on April 8 presented a preliminary fiscal year 2026 budget that projects modest revenue growth after a property-tax recalibration, rising personnel costs and several risk items the board and administration are monitoring.

The district's finance presentation said the state formula allowance increase used for planning is 2.74%, generating roughly $2.6 million in additional state aid, and the enrollment projection (about 111 additional ADM) is expected to add roughly $830,000. Offsetting those increases, the district reported a one-time property-tax recalibration reduction of about $2.3 million; board members summarized the net effect as approximately $1.8 million in positive revenue change for FY26 compared with the prior year.

On the expenditure side, district staff projected overall general fund spending to rise about 3.28% for FY26. Salary and wage estimates reflect program growth and step/lane movement; staff said the aggregate salary-related increase included new hires tied to enrollment and program needs. Benefit cost drivers called out during the presentation included a planned TRA employer-rate increase (from 8.75% to 9.5%), Minnesota paid-leave employer contributions (estimated 0.44% and roughly $250,000 in district cost), and a projected 5% increase in health insurance costs (the district estimated it would carry roughly half that amount after employee premium shares).

Special education funding remains a principal pressure point: presenters told the board that already-applied proration of special education reimbursement at about 5% will reduce state aid by roughly $1.5 million for the district, and that the district continues to carry a special-education cross-subsidy estimated at roughly $7 million from the general fund.

Fund balances: Finance staff reported an improving general-fund unassigned balance, projecting an unassigned general-fund balance near $16 million (about 7.4% of general-fund expenditures) by June 30, 2026. The districtalso said its internal insurance (self-funded) reserve is growing and could reach about $8 million by next year; that fund holds health and dental premiums and claims. Staff noted the student-nutrition (fund 2) balance will need to be reduced toward a three-month reserve by FY27 and the building-construction/LTFM plan contemplates borrowing about $21 million next year to smooth levy effects.

District presenters flagged several legislative and fiscal uncertainties that could change the budget, including possible changes to special-education prorate/reimbursement, proposed reductions to special-education transportation reimbursement, and broader state aid formula changes. Board members and staff discussed contingencies for those outcomes and the need to monitor legislation through spring.

Ending: The presentation was a preliminary draft; finance staff said final budget adoption is planned for June and that the district will update numbers as legislative actions and final hiring decisions are known.