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Osseo board adopts fiscal 2026 budget that draws on reserves amid projected gap
Summary
The board approved fiscal year 2026 budgets for all funds after staff presented a budget that budgets a 2.2% revenue increase, a 9.1% rise in general fund expenditures, and an anticipated operating deficit that will be covered in part by fund balance.
The Osseo School Board on June 24 adopted the district’s fiscal year 2026 budgets for all funds after a staff presentation and board discussion. The motion to adopt passed unanimously by recorded vote 6–0.
Kelly Bannoussa, director of business services, told the board the proposed general fund budget budgets a 2.2% increase in revenues (about $7 million) and a 9.1% increase in general fund expenditures versus the revised fiscal 2025 budget. Bannoussa summarized revenue and expenditure drivers and said the proposed budget reflects long-range financial planning work and earlier board direction from a June 10 work session.
Key numbers presented by staff include a projected operating deficit of $22.7 million for fiscal 2026 and an ending general fund balance projected at 25.4% of annual expenditures (about $88.3 million). Bannoussa said the proposed ending balance is about $12.4 million lower than the February projection but still exceeds the board policy minimum fund balance of 5%.
Bannoussa outlined revenue changes that affect the 2026 outlook: a projected $7.3 million increase in general education aid (largely due to a 2.7% increase in the basic formula allowance and a projected 345-student increase), an operating referendum decrease of $2.2 million tied to projected student and market-value changes, and a $1.3 million increase in TRA pension adjustment revenue. She also listed program and one-time variances such as a $749,000 reduction in one-time revenue tied to a teacher training grant and an added estimate of $5.5 million for compensatory hold-harmless funding.
On expenditures, staff said the general fund budget is nearly $12.6 million higher than earlier projections and includes board-approved adjustments such as enrollment alignment increases, payroll-tax changes tied to expanded family medical leave, and other staffing and program adjustments. The long-range forecast shared with the board projects continued pressure on revenues and anticipates $14 million in operational reductions to be identified for the 2028–2030 period if trends continue.
Bannoussa told the board the district is near the operating referendum cap with inflation and cannot rely on that lever for revenue growth; staff and board will continue forecasting and scenario planning. The final adopted budget covers five funds presented to the board: the general fund, food and nutrition services fund, community service fund, capital fund and debt service fund.
The board discussed the budget with staff and several members praised the finance team’s work in a challenging legislative environment. Bannoussa closed by noting the budget is the outcome of the district’s long-range financial planning process and earlier board guidance.
Action: Board approved adoption of fiscal year 2026 budgets for all funds, vote 6–0.
