District finance staff project out‑year shortfalls; board asked to set budget parameters

Rochester Public School District finance staff told the school board on Jan. 14 that the district’s three‑year general fund forecast shows growing pressure in out years driven by enrollment changes, employee benefit cost increases and routine inflation in contracts and services.

Superintendent Kent Pickell prefaced the finance presentation by reminding the board of the district’s referendum commitments. “The commitment that we made in the referendum is we are not closing schools, we are not raising class size, and we are not making major cuts to district systems and programs, at least for the first years of the referendum 10‑year period,” Pickell said.

Andy Crockstead, director of finance, walked the board through the forecast and emphasized that a forecast is an estimate, not a proposed budget: “It is very important to understand it is not the budget. We’re using this year’s budget as a baseline to look at the future years, but the future years do not represent the budget.”

Key figures and assumptions presented: - Enrollment projection: staff reported an Oct. 1 ADM of about 16,974 for the upcoming school year and an adjusted year‑end ADM projection of about 16,635. That difference represents a projected net decline of roughly 339 adjusted ADM compared with the current year on the Oct. 1 snapshot; staff said enrollment drives the district’s largest revenue sources. - Referendum revenue: the recently approved Ignite Student Learning referendum amount ($1,133 per pupil in communications to voters) is included in the forecast and will be indexed for inflation in the projection assumptions. - Expense assumptions: staff used a 3% annual increase for salaries and wages, projected a 9% increase in health insurance for the current year and modeled 7% in subsequent years, and noted capital or vendor contract costs (for example, transportation and software subscriptions) are rising faster than standard inflation in many cases. - Fund balance policy: the board’s 8% unassigned fund balance target was stressed; staff warned that without course corrections, the unassigned fund balance could fall below that 8% policy in later years.

Crockstead and colleagues described a set of recommended budget development parameters for the board to adopt in the coming week so staff can prepare a proposed fiscal 2025–26 budget. Those parameters include building the balanced budget model into the district proposal, aligning the budget with SCIP (the district improvement process), maintaining commitments made in the referendum (including avoiding school closures and major class‑size increases), and directing staff to bring back a long‑term financial strategy to address forecast gaps.

Board members pressed for details about enrollment drivers, the potential revenue impact of retaining students, and whether state action (for example, special education or English‑learner aid changes) could materially improve the district outlook. Staff said they will commission an independent enrollment study this spring and continue to refine forecasts as more data become available.

Crockstead flagged a piece of upcoming state policy that the district had not yet built into the forecast: a new employer payroll obligation for paid family and medical leave expected to begin in 2026; staff said that payroll cost is not yet included and will require adjustment once program rules and rates are finalized.

Several board members asked staff to return a comprehensive budget proposal in June that includes both the operating budget for 2025–26 and a long‑term financial stability plan. The superintendent said staff will present specific options and tradeoffs, including potential adjustments to discretionary spending and contract renewals, to keep the district on sound financial footing while honoring referendum commitments.