South Portland schools project steep FY26 local increase; superintendent warns staff reductions likely

Superintendent Matheny told the South Portland Board of Education on Tuesday that maintaining current programs into fiscal 2026 would require an 11.4% increase in the district’s local budget, a rise he described as “considerable.”

Matheny said carryover federal special-education funding that temporarily covered several staff positions has been exhausted and that some staff now funded through Title I, Title IV and McKinney-Vento grants will need to be carried into the local budget. “If we move [current services] forward to FY ’26 … that would result in an 11.4% local budget increase,” Matheny said.

The superintendent framed the figure as untenable and said the district must reduce reliance on its fund balance, which in recent years exceeded $1 million annually; the goal is to lower that reliance to under $1 million for FY26. He also said the district has declared a nonessential spending freeze through June 30 to preserve resources while the budget is developed.

Why it matters: Matheny said 80% of district costs are salaries, wages and benefits, and driving down costs will require difficult personnel decisions. “The bottom line … is that we will need to do reductions in employee positions,” Matheny said, while adding the district will seek to minimize impacts and place affected employees elsewhere in the district where possible.

Key budget drivers and specifics cited by Matheny:

- Exhaustion of federal special-education carryover that had funded some positions; several of those roles now must be shifted to the local budget. - Positions currently funded by Title I, Title IV and McKinney-Vento grants also may need local-budget support. - New special-education needs: dozens of incoming kindergarten students have individualized education programs (IEPs); the district reported an estimated 70 incoming kindergarteners with IEPs and noted that districtwide about 20% of students currently have IEPs. - Every 1 percentage-point increase in health-insurance costs equals roughly $80,000 in additional district expense; health-insurance rates will not be known until early April, Matheny said. - Offsets: a roughly $100,000 decline in current debt service and a $630,000 increase in state subsidy — both reduce, but do not eliminate, the gap.

Board members asked for clarifications during the report. Adrian (board member) asked what is covered by the nonessential freeze; Matheny said legally required payments and materials needed to complete the year will continue, but discretionary purchases should be delayed where possible. Elliot (board member) asked about remote instruction for snow days; Matheny said the district is planning five potential snow days before considering remote instruction only if six or seven days are needed.

Matheny said bargaining with three employee associations whose contracts expire June 30 is another source of uncertainty that could change final budget numbers. He said the district plans to present the superintendent’s proposed FY26 budget to the board on March 10 and could return in early April if insurance or bargaining outcomes require modifications.

The board did not take formal action on the FY26 budget during the meeting; Matheny’s presentation was a preliminary report in advance of the March 10 budget proposal.

Ending: Matheny said the administration will inform impacted employees in the coming weeks and provide support for staff who are placed into different positions or who pursue other options. He emphasized the district’s intent to limit layoffs where possible while meeting legal obligations to students with special education needs.