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MMSD staff outline 2025–26 budget outlook: enrollment modestly up, state and federal funding uncertain
Summary
District officials told the Operations Work Group that enrollment is stabilizing, the voter-approved operating referendum will roll into base revenue, and big cost drivers for 2025–26 will be salary increases, double-digit health-care cost growth and uncertain federal reimbursements; staff will return with detailed projections in March.
District leaders presented an early 2025–26 budget update to the Operations Work Group, describing revenue drivers, enrollment counts and risks as the district moves toward a preliminary budget proposal in June.
Dr. Gothard and Bob Solner said two factors will be most important for the 2025–26 budget: state revenue-limit actions (the statutory per-pupil revenue increase and related aid decisions) and the district’s enrollment projections. Solner told the committee the current revenue-limit per-member increase reflected in state law is $325 per pupil; the CPI used for 2025–26 salary planning is estimated at 2.95 percent. He said the district still needs final state budget action to confirm those amounts.
Key numbers and points staff presented: - Voter-approved operating referendum: $30,000,000 added this year and again next fall, then $20,000,000 in each of the subsequent two years; the referendum funds roll into the district’s base revenue. - Enrollment counts: the district reported a 3rd‑Friday September count of 25,667 (a seasonally adjusted figure) and submitted a second‑Friday-in‑January count that Solner said was up 87 FTE compared with September; Solner described the trend as stabilizing with modest growth. - Health-care costs: staff budgeted about $12 million last year for health-care increases; Solner said he expects another double-digit increase for 2025–26 and estimated 12–15 million as a plausible range for next-year health-cost growth. - Federal reimbursements: the 2024–25 budget assumed roughly $37 million in federal reimbursements. Solner said the district currently has about $7 million in reserve of those expected funds; if the federal funding were eliminated, he said the district would face a roughly $30 million hole that could require fund-balance use or spending cuts. - Fund balance policy: board members debated a target range. Solner described a possible policy targeting 12–24 percent; some members expressed concern that a proposed 17 percent target would sit too close to current balance and leave limited flexibility.
Board discussion focused on timing and uncertainty from the state. Members asked whether the district uses Department of Public Instruction (DPI) or governor’s budget proposals as forecasting tools. Solner said the district follows DPI and will refine projections after Governor Evers’s budget and subsequent legislative action; he noted the “hold harmless” provisions in state law that preserve a portion of current aid in the near term and that a Wisconsin Supreme Court decision could change the status of prior veto-related revenue provisions.
Why it matters: staffing and benefit costs represent the largest portion of the budget—Solner reminded the committee that staff and benefits are roughly 81 percent of the operating budget—and small percentage differences in pay or benefits translate into large dollar amounts. The referendum revenue helps but does not eliminate exposure to inflation, health‑care cost growth, federal funding risk or enrollment shifts.
Ending: Staff will present more detailed revenue-limit and staffing allocations at the March Operations Work Group, including updated salary and health-benefit estimates; the board will receive a preliminary budget in June.
