Grand Rapids Public Schools approves FY26 budget despite projected OPEB shortfall

The Grand Rapids Public School District Board of Education approved the district’s FY26 original budget on June 16, 2025, with board members saying the shortfall is driven mainly by retiree benefit obligations and will be addressed through a levy next year.

Kara, the district business officer, told the board the current FY26 plan shows about a $2.6 million operating loss as presented: she said the district has $3.8 million recorded as retiree benefit expenses in FY26 that are being partially offset by an estimated $1.2 million operating surplus. "If not for this fund balance, we wouldn't be able to cover this next year's retiree benefits," Kara said during the presentation.

The budget presentation also noted the district's unassigned fund balance measured by the Minnesota Department of Education was 13.57% at the end of the previous year; Kara said that is below the state average (23.9%) but in compliance with the district’s fund balance policy. She warned that a drop below negative 2.5% would trigger statutory operating debt (SOD) review by the state.

Board members pressed staff on enrollment assumptions and timing. The district is budgeting 3,742 average daily memberships (with 42 online enrollments included in that figure), and Kara said historical enrollment over 20 years averages about 3,858. She and Superintendent Gross said enrollment is monitored weekly during the summer.

On retiree benefits (OPEB), board members asked about potential mitigation. Superintendent Gross described a process underway to compare Medicare‑subsidized supplement options against the plans retirees currently hold and to ask HealthPartners to match proposed alternatives. "We're sort of in the process of getting some feedback on how the options that we have considered ... compare to the plan that our retirees are on now," Gross said. He said timelines are tied in part to Medicare enrollment windows later in the year.

Kara said the district expects monthly financial reporting to the board and will present revised budget work as needed. She also reiterated that some legislative changes finalized late in the session were not fully reflected in the packet figures; staff had prepared a revised budget to incorporate those items where appropriate.

Board Chair Julie called for the motion to adopt the FY26 budget. After a second and brief discussion, the board voted to approve the FY26 original budget.

The board approved a range of other routine items during the same meeting, including personnel and program agreements (see "Votes at a glance" article in this package). Kara said staff will continue to produce monthly financial reports and a revised budget if legislative or enrollment changes require adjustments.

The district will continue to pursue OPEB mitigation analyses and expects to levy in the following year to cover the retiree benefit obligation, per the presentation and board discussion.