Pelham City Schools presents FY26 budget; board hears plan to build $20 million capital reserve for future high school

Pelham City Schools held the first of two required public budget hearings Monday, Aug. 25, as district finance staff presented a proposed fiscal 2026 budget that estimates $62.5 million in total revenues and projects roughly $220,000 in excess general‑fund revenue while leaving the district with a projected 3.3‑month operating reserve.

Budget presenter Lauren Butts told the board the district’s all‑funds excess revenues over expenditures are about $3.1 million and reiterated a state requirement that a one‑month operating balance equal to roughly $4.6 million must be maintained. "If we do, that is when the state starts looking at us," Butts said of falling below the required reserve, adding that the district would then be required to meet with the state to explain staffing and spending choices.

The hearing focused heavily on long‑range capital planning. Butts said Pelham is planning now to build a capital reserve to help fund a future high school, estimating current construction costs for comparable schools at about $100 million and the district’s prudent borrowing capacity at about $80 million. To avoid cutting classroom services, the district's target is a $20 million capital project reserve. "Responsible budgeting today ensures that we can plan for a new high school without compromising the quality of instruction or student support," Butts said.

Why it matters: Pelham is not a taxing authority and depends on county and state revenue streams, local sales taxes and federal grants. That revenue mix means the district must hold larger reserves to absorb…