Okemos board hears early 2025–26 budget assumptions as state revenue and retirement changes loom

At its Feb. 24 meeting the Okemos Board of Education received an early briefing on assumptions for the 2025–26 budget from Executive Director Lance Lentz and Superintendent John Hood, who said the district is "very early in the budget season" and outlined how proposed state actions could increase or reduce district revenue by roughly $1.6–$1.9 million.

The presentation focused on three revenue components and several expense drivers that affect the district’s starting point for the 2025–26 budget. Lentz reviewed the governor’s Feb. 5 executive budget recommendation, noting a proposed $392 per‑pupil increase in the foundation allowance that would move most districts to about $10,000 per pupil; for Okemos that single change would be worth about $1.8 million if the executive proposal holds. Lentz also outlined a one‑time change to retirement funding tied to a temporary adjustment to the MPSERS (Michigan Public School Employees’ Retirement System) rate cap that will reduce revenue for 2025–26, and a health‑care shift in which a 3% employee health contribution would become an employer cost; the executive proposal would reimburse about half of that employer cost in 2025–26, producing roughly $143,000 in additional revenue under a 50% assumption.

Board members heard multiple scenarios. In an optimistic version the foundation allowance and special‑education aid increases could offset expenses and push the district toward a roughly $1.4 million net revenue gain from the highlighted components, which Lentz equated to about $150 per pupil. In a more conservative outcome — for example if the governor’s foundation increase is reduced in later legislative steps — the district could face a net revenue loss on the order of several hundred thousand dollars. Lentz summarized the sensitivity: "you have to look deeper than just the foundation level," because retirement‑rate changes, health‑care costs and ISD special‑education funding adjustments move the net result substantially.

On expenses, presenters flagged a planned increase in employer health‑care costs (six months of a referenced 16% increase for certain plans equals about $291,000) and an ISD special‑education formula change Lentz said will reduce revenues by about $470,000 next year and an additional roughly $700,000 the following year. He also showed that the temporary retirement revenue cap relief received in the current year is one‑time and would not recur, reducing revenue by nearly $1.8 million in 2025–26 if not replaced by other sources.

Superintendent Hood and Lentz walked trustees through a starting point that includes a projected use of fund balance around $1.8 million carried forward into 2025–26, plus $2.9 million in added expenditures and $1.9 million of potential revenue increases under the most favorable scenario; together those variables produced a projection in the briefing that could reduce the district’s fund balance to an estimated 9.7 percent if the conservative assumptions hold. Hood reminded the board that contract negotiations, enrollment, final state aid figures, and health‑insurance assumptions remain outstanding.

Trustees asked for timing and contingency details. Lentz said the district will track the governor’s proposal against later House and Senate budgets and an upcoming revenue consensus process, with updated matrices comparing all budget versions. He noted an April ISD estimate that should refine special‑education revenue and described a planned second budget revision in May with adoption targeted for the board’s June meetings (information on June 9 and potential adoption June 23 were cited). "We have to finalize state aid, look at health insurance, look at enrollment and negotiations," Hood said, describing the remaining tasks before finalizing assumptions.

Why this matters: the foundation allowance and retirement funding components are large and politically dynamic. Small changes at the state level can translate into six‑figure impacts on the district’s general fund; those swings affect staffing and program decisions the board will face this spring.

Looking ahead, district leaders told the board they will provide updated matrices when legislative actions conclude, refine special‑education estimates in April, and present a May budget revision before final adoption in June. Lentz and Hood emphasized recurring updates at board meetings so trustees can respond to changing state and federal signals rather than adopt a single static assumption.