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 sudden revenue declines or unexpected capital costs (HVAC, roofing, large equipment). Butts told the board that roughly 84.5% of expenditures are not easily reducible within a year and that personnel costs — salaries and benefits — account for about 61.8% of total expenditures.

Key budget figures presented at the hearing: - Estimated FY26 revenues (all funds): $62.5 million. - Projected general‑fund excess (revenues over expenditures): approximately $220,000. - Projected all‑funds excess: about $3.1 million. - State required one‑month operating reserve (general fund): about $4.6 million. - Projected general‑fund reserve at year end: about 3.3 months. - Estimated student ADM for the coming year (preliminary, not final until after Labor Day): about 3,354. - Staffing included in the budget: 438.5 positions (279.5 certificated; 128 support; 31 contracted paras). - Target capital reserve for a new high school: $20 million; estimated construction cost used for planning: ~$100 million; estimated borrowing capacity: ~$80 million.

Butts walked through revenue sources and restrictions: state foundation allocations that drive certificated unit funding, federal program allocations including IDEA and Title I–IV restrictions, and local revenue that includes a 1¢ city sales tax and a countywide 0.5% sales tax allocation. She noted the district relies more heavily on local revenue than many districts and highlighted an ongoing concern about the state’s sourcing of online sales (SSUT). "When you purchase through those apps, even though you're getting it from a place inside Pelham...then they get away with SSUT instead of direct sales tax to the schools," she said, noting the district is watching the issue while change would require state legislative action.

During public comment, resident Russell Platt provided an independent estimate of SSUT effects, saying the state allocated about $2,051,000 to the district in 2024 from SSUT and that a back‑calculation suggests about $85 million in local online spending; he estimated that if that spending had been subject to the local 1% tax it would have produced roughly $850,000 (a figure he described as a conservative estimate), and he urged the board to consider that loss in planning.

Board members asked follow‑up questions about timing for reaching the $20 million reserve goal. Butts said the district expects to be at roughly $16.5 million toward that goal in 2026 and that, depending on capital plan choices, the district could reach $20 million within about two years under current assumptions if nonrecurring advancement funds are not relied upon.

Other items considered and board votes: the board approved routine personnel actions, contract renewals for student programs and services, several field‑trip requests for school bands, surplus‑property declarations, and automobile/fleet insurance coverage. Those approvals were presented as separate agenda items and passed by voice vote.

Quotations are from the Aug. 25 public hearing and budget presentation by Lauren Butts and from public comment by Russell Platt.

The board scheduled the second required budget hearing for Sept. 8 at 8:30 a.m. and will accept written public comments between hearings; Butts noted the full presentation and a 150‑page packet are available on the district website.

Votes at a glance (agenda items approved Aug. 25): 1) Renewal of agreement between Pelham City Schools and the day program — approved. 2) Renewal of agreement for occupational therapy services (short‑term overlap contract) — approved. 3) Middle school band field trip to Orlando — approved. 4) High school band travel to Bands of America competition in Chattanooga, Tenn. — approved. 5) Pelham High School band participation in St. Patrick's Day parade in Chicago — approved. 6) State‑mandated principal mentoring agreement — approved. 7) Amendment to a part‑time employee agreement — approved. 8) Part‑time interventionist at Pelham Ridge Elementary — approved. 9) Part‑time interventionist at Pelham Oaks Elementary — approved. 10) Part‑time contract for extended‑day program staff (after‑school care) — approved. 11) 2025–26 teams contract for 12 employees (middle and high school math/science recruiting/retention stipend) — approved. 12) Employee supplement approval — approved. 13) Declaration of surplus property for child nutrition program (two coolers, one hot water dispenser) — approved. 14) Automobile/fleet insurance coverage ($53,080.51) — approved.

Next steps: a second public hearing is set for Sept. 8; following that the board will consider adoption. The district will continue capital‑planning work and the facilities office will present a formal five‑year capital plan for board consideration at a future meeting.