Farmington board reviews FY26 budget projection, proposes use of reserves to close $1.4 million gap

Farmington School Board members spent the work session focusing on the district’s proposed FY26 budget and how state funding changes could affect revenue and services.

Director Huska, who led the presentation, said the district is still modeling revenue because the Minnesota Legislature has not finished its work for the next biennium. She said the state is keeping the general formula with a 2.74% inflation factor for FY26, will hold compensatory funding harmless for now and will reduce special education transportation funding by 5% in FY26 and another 5% in FY27. "This budget conversation is, you know, we talk about it all year long," Director Huska said.

The presentation placed the district's current revenue at about $94 million and expenditures at about $98 million; that gap is being addressed in part by drawing on reserves. "We are looking at using roughly $2,800,000 out of our assigned fund balance," Director Huska said, and she described how $500,000 of that sum was reserved for health insurance, $200,000 for community education and $100,000 for long-term facilities timing, leaving roughly $1,400,000 to be covered by other reserves or reductions. She added that the district’s assigned fund balance has grown over time and that the district has intended some of those dollars for specific, future needs.

Board members pressed staff on what further reductions might be possible and when they would be identified. One board member asked whether operating or staffing reductions could be found to reduce reliance on one-time fund balance. Director Huska said about 80% of expenditures are staffing and that options for reductions likely would not fully close the gap but that administration would review options before the June business meeting.

Why this matters: the board is planning a referendum in November and must balance near-term use of reserves with long-term fiscal stability. The finance discussion stressed that some of the dollars proposed for use are earmarked for specific purposes (for example technology refreshes and community education support) and therefore not all reserves are available for general operations.

Supporting details and next steps: board members asked staff to return with additional options for reductions before the business meeting later in the month. Director Huska also outlined legislative items affecting district revenue streams, including potential renaming and restriction changes to literacy aid, expanded allowable uses for the food-service fund and long-term facility maintenance (LTFM) formula changes. She reported that the district’s food-service fund currently has revenue outpacing expenditures and that federal rules reverting post-pandemic will lower the recommended fund balance from six months to three months of expenditures, which will prompt spending from that fund on equipment and kitchen improvements.

The board did not adopt a final budget at the work session; staff will refine modeling and return recommendations for the upcoming business meeting.