Oshkosh Area School District reports larger-than-expected budget deficit after spike in health and transportation costs

At its Wednesday, Aug. 13, meeting the Oshkosh Area School District reported an increased budget deficit driven primarily by an unexpected run of health-care claims and higher transportation costs for homeless students, district staff said.

Drew Neehan, who presented the budget-variance report to the Board of Education, said the district ended the year with $22,900,000 in health-plan expenses compared with $26,500,000 the prior year, but that a recent cluster of large claims added millions to the final tally. "We had a week of a million 8 that came in in May, June," Neehan said, and that was followed by other large weekly claim batches that together poured about $3,000,000 into the plan over roughly six weeks.

The spike in retiree health claims (OPEB) was described as an outlier year: staff told the board they expect that portion to return closer to previous levels and said the proposed 2025-26 budget currently budgets $22,600,000 for health-plan costs. Purchase-of-service expenses ended the year at $25,400,000; the staff-recommended 2025-26 budget shows $28,300,000 for that category.

The district also cited roughly $300,000 in costs for transporting homeless students this year, a figure that exceeded earlier estimates. Neehan explained that under the McKinney-Vento federal law the district is required to provide transportation back to a student’s last-known school even if the family’s temporary location is outside Oshkosh. When contracted providers reach capacity the district must hire outside contractors; those trips can extend to other communities and become costly.

Board members pressed staff on whether the shortfall is structural. Neehan said there is a structural component because state revenue increases (about 2.8% for the coming year) are not keeping pace with CPI-level cost increases and the district’s salary and step/lanes. He said special-education reimbursement growth will provide partial relief in some funds, but that structural pressures remain and will be discussed at upcoming Facilities and Finance committee meetings.

Neehan told the board the district plans to add a monthly tracker to variance reports to show progress toward rebuilding the fund balance, which had dipped below the district policy minimum of 12% of Fund 10 expenses. When asked for a rough number, a staff member estimated the district is “about in that million and a half range” below the 12% target but said that figure was preliminary.

Board members asked about other budget drivers and whether the district can improve early warning of late-breaking expenses. Neehan said the timing of health claims creates a 30- to 90-day lag between service and the district receiving final claim data; that lag, combined with several unusually large claim weeks, made it difficult to provide earlier, stable estimates. He said staff alerted district leadership as soon as the numbers could be calculated with reasonable confidence.

The board was told detailed reviews and budget adjustments will continue in the coming weeks; staff said they expect to present updated figures and strategies to restore the fund balance at the facilities and finance committee.

Ending: The board scheduled additional review in committee; no specific budget cuts or policy changes were adopted at the Aug. 13 meeting.