Shakopee board adopts 2025-26 budget, approves two-question operating levy plan and acknowledges $3 million in cuts

Shakopee Public Schools trustees adopted the district's 2025-26 budget and approved ballot language for a two-question operating levy during the June 23 board meeting.

The board approved placing a tax-neutral operating levy question on the Nov. 5 ballot that would replace expiring bond levy dollars with roughly $5 million in new operating revenue, and a contingent second question that would raise up to an additional estimated $2.3 million if the first question passes and voters approve the second. The board also formally recognized $3 million in permanent expenditure reductions for the 2026-27 fiscal year.

The budget presentation noted key assumptions: a formula allowance of $7,281 per pupil and a projected budget enrollment of 7,457 students for 2025-26, a decline of 82 students (about 1 percent) from the prior year. District staff projected total revenues of about $167.3 million and expenditures near $174.0 million across all funds, and reported an expected general fund unassigned balance near 10 percent of expenditures at June 30, 2026.

"We're projecting a 7 to $9,000,000 deficit" in 2026-27 without action, a presenter said during the discussion. Board members and staff repeatedly described declining enrollment and state funding as primary drivers of the structural gap.

Board members discussed the levy structure at length. Question 1 was described as tax-neutral because it would shift the tax burden from an expiring debt levy to a new operating levy, keeping calendar-year 2026 taxes roughly equal to 2025 for taxpayers if voters approve. Question 2 would be contingent on Question 1 and would raise the district toward the state operating levy cap; staff estimated that question would produce about $288 per pupil and roughly $2.32 million in additional annual revenue but cautioned the Department of Education has not finalized the exact cap for the next year.

Board members said the district will move forward with a baseline of $3 million in targeted, permanent expenditure reductions for 2026-27 regardless of ballot outcomes. They described that amount as a mix of staffing right-sizing tied to enrollment declines and other ongoing reductions; larger, across-the-board cuts would be required if additional revenue is not approved by voters.

The motion to place ballot questions and to recognize the $3 million in permanent reductions was moved by Peterson and seconded by Smith; the motion carried unanimously.

The board also approved the district's detailed budget documents and directed staff to publish the adopted budget on the district website and complete required state filings.

Looking forward, trustees and staff said they will present final ballot language and related election resolutions at the July 28 meeting to meet statutory deadlines. Officials cautioned that even with Question 1 passing, the district could still face deficits in 2027-28 and that Question 2 is intended to address part of that projected shortfall.

"This is a 1-time opportunity to use assigned balances to remain at 10% next year," a finance presenter said, describing the district's plan to spend down restricted and assigned balances to maintain policy fund levels while implementing permanent reductions.

The board recorded the motion and vote on the record; the motion carried unanimously.