Shakopee school finance team presents fiscal 2026 budget assumptions and long-range model showing potential deficits in 2027–28

Finance Director Bill Bonacchio presented the proposed fiscal 2026 general fund budget to the Shakopee Public School District board on April 14 and described underlying assumptions; Superintendent Michael Redmond and the board then discussed a long-range financial planning model extending to fiscal 2028.

Bonacchio said the budget process is governed by statute (Minn. Stat. 123B.77) requiring the board to approve an annual budget prior to the fiscal year start on July 1. For fiscal 2026 the district’s guiding principle is to maintain an unassigned general‑fund balance near 10% of expenditures. He presented the following published assumptions and projections for fiscal 2026 (preliminary): general fund expenditures budgeted at about $132,200,000 and projected general fund revenues of approximately $125,500,000, with a planned use of restricted and assigned fund balances to remain at 10% unassigned fund balance at June 30, 2026.

Key assumptions Bonacchio described include a projected student enrollment of 7,457 (a decrease of 82 students year‑over‑year), 3% inflation for non‑wage items, specific increases for transportation and property insurance, and projected state formula increase of 2.74 percent for general education aid (to roughly $7,481 per pupil). Bonacchio noted that some federal pandemic-related revenue has expired, reducing total revenue compared with prior years.

Redmond presented a long‑range financial model showing that if the district takes no further revenue or expenditure actions, the unassigned general fund balance could decline from the projected 10% at 06/30/2026 to roughly 3.9% at 06/30/2027 and to negative territory by 06/30/2028. Redmond and Bonacchio presented three options to address the projected gap: a) make permanent budget reductions, b) increase local revenue (a tax-neutral operating levy timed to replace expiring bond property tax), or c) a combination of both. They noted a potential tax-neutral operating levy in calendar 2026 could generate about $4.8 million and that a combination of levy revenue and roughly $3 million in permanent budget reductions could partially address the fiscal 2027 shortfall; staff estimated a broader need in a range of approximately $7 million–$9 million to stabilize later years depending on enrollment and other variables.

Board members asked about the timing for levy decisions (deadline for placing a question on the ballot), possible staffing or program reductions and the uncertainty introduced by enrollment trends, paid family / medical leave costs and other inflationary pressures. Bonacchio said the district has already planned one-time curriculum spending out of operating capital and that certain fund balances (restricted/assigned) exist that could be used in fiscal 2026 to smooth the transition while longer‑term decisions are made.

Ending: Bonacchio and Redmond said they will continue to refine projections, present more detailed scenarios to the finance and facilities committee and bring a recommended fiscal 2026 budget to the board for approval in June; the board signaled it will consider a combination of revenue and reductions as it moves toward decisions for fiscal 2027.