Batavia district posts tentative 2026 budget showing operating deficit as capital transfers fund 'warm, safe, dry' work

Batavia USD 101 posted a tentative budget that shows the district transferring $14,000,000 from operating funds to the capital projects fund to help pay for the district's Warm, Safe, Dry facilities plan, district Treasurer Tony said at the board meeting. "We are transferring out of those operating funds $14,000,000 through the capital projects fund to fund, in part and over a period of time our warm, safe, dry project," Tony said.

The transfers create a planned operating deficit for the 2026 fiscal year. Tony told the board the district expects combined total revenue of "132,000,000 with expenditures at 140" across all funds, and that operating revenue is projected at about $100,800,000 with operating expenditures of about $96,900,000 before transfers. After the transfers, he said, the operating funds show a roughly $10,300,000 deficit and the district-wide deficit is about $8,300,000.

Why it matters: the district is deliberately using fund balance and interfund transfers to advance capital work this year, but board members and staff warned that repeated transfers will lower reserves and could force the district to slow or restructure capital projects if state or federal reimbursements fall short.

Tony said the capital transfers are intended to pre-fund construction invoices that can fall across fiscal years: "Some bills come early, some bills come late, and we're straddling 2 fiscal years in the summertime." He added the current plan does not require issuing new debt, and that after the coming fiscal year the district will have no outstanding debt obligations.

Board discussion centered on forecast risk, reserves and state funding shifts. Tony told the board the district is facing an ongoing revenue pressure from state changes to reimbursement programs that he estimates will reduce mandated categorical reimbursements by about $1.2 million annually. "The primary driver...is that we're losing $1,200,000 estimated from state revenue that we would otherwise have gotten under the old commodity," he said. He told the board that because the state is prioritizing the Evidence-Based Funding (EBF) model, some categorical reimbursements (special education, transportation, food service) are effectively receiving less new money than in prior years.

Board members pressed staff on reserve targets and timing. One board member reminded colleagues that a district fund-balance policy sets a minimum reserve level the board expects to maintain; Tony said the policy's minimum target translates into roughly $30 million to $40 million depending on revenue each year. He told the board he had adjusted the tentative budget to keep the district as close to that minimum as staff believe is prudent.

Staff said the tentative budget will be posted for public review and that a public hearing is scheduled for the next regular meeting (July 22) before adoption in August. Tony said the presentation and a more narrative budget summary are linked to the agenda item for community review.

Ending: Board members agreed to continue refining forecasts and to discuss the timing and scope of capital work in coming months; staff said they will present updated forecasts and suggested communication materials ahead of the public hearing.