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Finance staff warns of tighter 2025–26 budget despite current-year balance; transportation and salary pressures highlighted
Summary
Finance staff reported the current operating budget is balanced for fiscal year 2024–25 but outlined pressures for the next fiscal year, including potential losses from coding changes to economically disadvantaged counts, rising insurance costs, transportation expenses and planned school openings.
Finance staff told the work session that the district’s current fiscal-year operating budget is balanced but that the board faces budgetary pressures for the 2025–26 fiscal year.
Staff reported the district’s operating budget for the current year is approximately $538,434,770. They said roughly three-quarters of the budget goes to salaries and benefits and that transportation spending for bus contractors is roughly $27,169,404 (about 5% of the operating budget). Utilities were reported at about $20.5 million. Staff said the district’s established fund balance has been approximately $100 million in recent years.
Looking ahead, staff said two state revenue changes could affect district revenue: (1) a possible increase in TISA allocations (administration projected a roughly 3% TISA increase that could add about $8 million to district revenue, noting the state/local split in funding); and (2) a coding change that removes Medicaid enrollment as an automatic indicator for economically disadvantaged weighting, which staff said may reduce district-weighted counts and cost the district an estimated $3–5 million versus current-year counts. Staff said free-and-reduced counts and other economically disadvantaged measures are already lower statewide because of coding changes.
Staff outlined other district cost drivers: property and casualty insurance increased about $700,000 last year and may rise again; estimated contractor liability costs related to the upcoming bus contract were presented (staff estimated roughly $1.3 million); opening a new school (Poplar Hill) will require hiring staff and is expected to cost roughly $2 million in staffing; and the district is planning a 2.5% employee pay increase as part of its compensation proposal. Staff said preliminary estimates show a potential structural shortfall in the range of $15–20 million for the next budget cycle if additional revenue or other offsets are not identified.
Why it matters: Salary, benefit and transportation costs form the largest share of operating spending and limit options for one-time investments or program growth. Staff urged board members that the coming budget cycle will involve prioritization and that growth positions may be limited.
What’s next: Staff said it will share the detailed figures and a formal budget presentation for the board as the district begins the budget process.
