Shakopee district presents FY2026 preliminary budget, warns of structural shortfalls for 2026–27

Shakopee Public School District officials on May 12 presented a preliminary fiscal 2026 budget that uses a portion of restricted fund balances to hold services steady next year and flagged a structural shortfall expected to begin in fiscal 2026–27.

The presentation by Zolmanazi, identified in the meeting as the district’s director of finance and operations, listed the main assumptions driving the FY26 budget: an operating-levy authority of $1,371.84 per pupil for tax payable 2025; a 2.34% inflation factor tied to levy limits; a state formula allowance increase of 2.74% that sets the per‑pupil formula at $7,281; and an enrollment projection of 7,457 students for 2025–26, a decline of about 82 students from the current year.

Zolmanazi said the general fund revenue for FY26 is projected at about $125.5 million and expenditures at roughly $132.2 million, and that the district plans to use portions of restricted and assigned fund balances to hold the unassigned fund balance near 10% of general fund expenditures. "I will give you the headline that I'm not planning to go over all 44 pages tonight," Zolmanazi told the board as he reviewed the executive summary and the assumptions that underlie it.

Why it matters: district officials and board members described the FY26 plan as balanced only because it draws down one‑time and restricted reserves. Multiple presenters — including district leadership during a later discussion — warned that without action the budget will be "structurally imbalanced" in 2026–27, forcing either program and personnel reductions or a new revenue measure.

Key details

- Enrollment trend: district enrollment has fallen from 8,189 students in FY2020 to a projected 7,457 in FY2026 — a decline of roughly 9% (about 732 students) since 2020, the presentation said. The board has contracted Hazel Reinhardt to complete an enrollment study; officials said they expect results in June.

- Fund balances and reserves: the district projects an unassigned general fund balance of about $13.18 million (roughly 10% of general fund expenditures) at the end of FY26, achieved in part by using restricted and assigned balances and by planned one‑time spending reductions in capital accounts.

- Debt and capital: the presentation shows two notable "debt drops" coming in fiscal 2027 (about $5 million) and in 2031 (about $7 million) tied to current obligations and refunding schedules. The district also noted capital‑project levies tied to net tax capacity following voter approval in November 2024.

- Cost pressures: administrators told the board that modest state increases in the formula allowance and levy authority do not fully offset inflationary pressures, rising health insurance costs, and the revenue loss tied to declining enrollment.

Board discussion and next steps

Board members pressed staff for clarifications about long‑term effects and options. Dr. Rebnick (district leadership presenting the financial update later in the meeting) summarized the tradeoffs: "We have a budget that is balanced for next school year, but it is becoming structurally imbalanced," he said, emphasizing that the 2026–27 school year will require either cuts, new revenue, or a combination of both.

Board members discussed levy options that staff modeled, including a tax‑neutral adjustment tied to expiring referendum debt; staff said a November ballot question could reduce near‑term classroom impacts but would not eliminate longer‑term pressure without additional action. The board scheduled further discussion at a June 4 special meeting and was told the FY26 budget will be brought to the board for approval on June 23.

What the board did: no final budget vote was taken May 12. Staff asked trustees to review the 44‑page executive summary and to submit questions ahead of the June 23 approval vote. The district also expects to receive the contracted enrollment study in June and to share that with the board.

Context and caveats

Officials repeatedly cautioned that the FY26 numbers rely on assumptions and that limited changes may still be made before the June approval. Staff said some one‑time items and restricted revenues are being used to maintain program levels for FY26 and that FY26 is not a permanent solution to the district’s long‑term fiscal pressures.

Ending

District leaders said they will return to the board in June with more details, including the enrollment study results and follow‑up analyses of levy and cut scenarios. The board asked staff to prepare clear, public‑facing materials so voters can compare options if a revenue measure is placed on a ballot.