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Preliminary 2025–26 budget shows $3.4M operating shortfall; board to consider fund‑balance transfers and 4% Act 1 index
Summary
Business manager presented a first look at the 2025–26 budget showing $155M in projected revenue, $158M in expenditures (operating shortfall ~$3.4M), and proposed uses of fund balance that would leave the district's unassigned fund balance near 4.97% of operating expenses if fully used.
Mister Testa, the district’s business manager, presented the preliminary 2025–26 budget at the Feb. 13 finance committee meeting, describing early revenue estimates, expenditure drivers and planned timelines for public inspection and board adoption.
Testa said the proposed revenue in the draft budget is about $155 million while proposed operating expenditures are about $158 million, producing a projected deficit of approximately $3.4 million. He told the committee the budget as presented maintains current programs and contractual obligations while reflecting preliminary medical and utility cost estimates.
On local revenue and taxes, Testa said the Act 1 index for 2025–26 is 4% and that the presentation used a 4% increase, though the effective millage increase would be about 3.73% because assessed property values declined in the district’s calculations.
Testa walked the committee through state and federal revenue items: he said the governor’s budget represented the smallest proposed increase in basic education funding in a decade, and that special‑education and federal sources showed limited or uncertain increases (and that ESSER carryovers explain some year‑to‑year federal declines). He included an estimate of an additional $107,000 in student‑weighted basic education funding but noted state formulas and enrollment changes could alter that amount.
Fund balance was a focus. Testa said the district began the fiscal year with about $10.8 million in unassigned fund balance. The preliminary plan would draw about $2.9 million from unassigned funds and an additional planned transfer to capital of $500,000, leaving an unassigned balance of roughly $8.0 million (about 4.97% of operating expenditures). Testa explained that typical unassigned fund balance policy targets range from 5% to 8% but noted the district cannot exceed 8% if it raises taxes in a year.
He outlined the proposed timeline: a proposed budget presentation in early April, a proposed final on April 24 with a public inspection period, advertising in late May, and final adoption in early June. Testa said the district will continue to monitor revenues and spending and that other administrators’ requests for new positions or programs are currently not being advanced while the numbers are refined.
No final budget action was taken at the committee meeting; staff said more detailed numbers and a second look at medical rates would arrive in March and April.
