Oshkosh school finance chief reports widening budget deficit after large health-claims spike

The Oshkosh Area School District reported a larger-than-expected budget shortfall at its Aug. 13 board meeting after several late health-insurance claims and other end-of-year costs drove expenses higher.

District staff presented the budget-variance update during the meeting. "The budget deficit is increased from where we had been projecting prior," said Mr. Neehan, who delivered the variance report. He told the board the increase has both structural and one-time components.

The district said recent large health-plan payments, including retiree (OPEB) claims, pushed the year's health expenses higher than earlier estimates. "We ended the year with $22,900,000 in health plan expenses overall," Neehan said, adding that three years earlier the district recorded $26,500,000 in health claims. He told the board the most recent year included an unusual cluster of large weekly claims that arrived within a short window.

Why this matters: the district's revenue increases from the state are not keeping pace with CPI and salary step-and-lane costs, creating a structural gap even as some federal- and state-level reimbursements (special-education reimbursements) provide partial relief.

Board members pressed staff for detail on major drivers. Neehan said the district budgeted roughly $300,000 for homeless-student transportation this year but that the line can be volatile. "You never really know how many homeless students you're going to have throughout the school year," he said, and noted the district must provide transportation under the McKinney-Vento federal law even when students temporarily live outside Oshkosh.

Staff described corrective budgeting steps for 2025—26: the district plans to budget $22,600,000 for health claims in the coming year and to adjust some plan design features in January to encourage different utilization. Purchase-services spending ended the year at about $25,400,000; the draft budget for 2025—26 shows $28,300,000 for that category.

Neehan acknowledged a timing issue: much of the additional health-claims liability was not fully visible until late in the fiscal year because of normal lag in claim submissions. He cited weeks in late spring that produced unusually large claim batches (for example, a week of approximately $1.8 million in claims, followed weeks later by $1.1 million). "Those were things that just happened so quickly," he told the board.

The district also cautioned that its fund balance dipped below the board's 12% policy threshold. "One thing we are going to have to do as we look at future budgets is be intentional about how do we build that balance back up," Neehan said, and proposed adding a monthly tracker to variance reports so the board can monitor progress toward restoring the policy target.

Board discussion focused on whether the deficit was largely structural or the result of one-time events. Neehan said there is a structural component tied to revenue growth that lags inflation and to ongoing cost pressures, but that some recent increases (notably the retiree claims) were unusual and expected to normalize. He said special-education reimbursement increases will help but that the board will continue detailed review in upcoming facilities and finance committee meetings.

The board and staff agreed to continue the discussion at committee meetings and to bring back more detailed proposals for restoring the fund balance and addressing structural revenue and cost issues.

Ending: The board scheduled further review in facilities and finance sessions; staff said they would circulate updated variance trackers and additional detail to members before those meetings.