Washoe County School District files tentative FY 2025–26 budget with $2.7 million shortfall after state funding shifts

Washoe County School District officials on May 27 filed a tentative fiscal year 2025–26 budget that still shows a projected deficit of about $2.7 million after a series of staff-recommended adjustments and late legislative changes.

The board voted to approve staff recommendations including a temporary drawdown of workers’ compensation reserves, modest increases to some facility-use fees, a reduction in the general-fund contingency account and the relocation/renegotiation of certain leased spaces. The motion to file the budget and authorize continued review passed 7–0.

District Chief Financial Officer Mark Mathers told trustees the budget picture tightened after the state Legislature and its committees revised education funding late in the session. “We are back to the original $9.7 million deficit,” Mathers said in context of earlier projections; subsequent choices and proposals brought the shortfall down but a reallocation in the statewide special-education line increased the district’s deficit by $705,000, he said.

Why it matters: the district is required to submit a final budget to the state in early June but, in legislative years, may later file an amended final budget after the session ends. Trustees and staff said they will keep searching for reductions and that June will be a busy month for contingency planning.

What the board approved - Workers’ compensation rate adjustment: staff proposed a slow drawdown of an overfunded workers’ compensation reserve that would relieve general-fund pressure by an estimated $312,000 in the near term while leaving a plan to restore reserves if claims spike. - Facility-use fees: staff recommended updating custodial/overtime fees to reflect recent wage increases (an approximate 20% increase in custodial overtime costs). That change is estimated to add roughly $40,000 to the general fund. - General-fund contingency: the district proposed reducing the contingency account from about $6.4 million to $5.0 million (moving the contingency below 1% of the general fund to roughly 0.75%). Trustees discussed risks if enrollment falls short at count day or unexpected costs arise. - Leased space relocations: staff continued to evaluate moving district operations out of leased buildings (e.g., Plum Lane) to produce ongoing savings; no immediate dollar savings were finalized at the meeting.

Staff also secured board authorization to continue a structured academic-area analysis requested by trustees. That review will examine programs including Gifted & Talented ($6.4 million total program cost, with only $1.5 million funded by the state), fixed allocations at small schools (where average per‑pupil cost is higher), and other centrally managed investments tied to the district strategic plan.

Legislative context: Mathers and budget director Jeff Fazo told the board two bills were especially consequential. Senate Bill 500, the K–12 funding bill, had passed both houses and sat on the governor’s desk; it included only a small $3-per-pupil uptick for the district but removed a previously expected 2% increase in part of the state special-education allocation for Washoe, shifting about $705,000 away from the district. Assembly Bill 398, which would fund incentives for hard-to-fill teacher roles and charter compensation parity, was also active late in the session and could affect final state decisions and timing.

Public comment and staff concerns: multiple employees and union leaders asked the board to prioritize clarity and notice for staff whose positions are funded by grants or temporary allocations. Representatives from Washoe Professional Technical Association (WEPDA) and Washoe Education Association (WEA) urged that any reductions be guided by student need and that the district maximize internal placement opportunities for affected staff. WEPDA president Adriana Publico and others asked that, when possible, affected employees receive extended notice or short-term contract extensions so that staff are not left without income abruptly.

Next steps: staff will return to the board in June with updated fiscal impacts after the Legislature finishes action. Trustees reserved June 10 and June 24 for additional budget deliberations and said an amended final budget could be filed later in the month if legislative actions change the district’s revenue outlook.

Ending: trustees emphasized they wanted to avoid midyear cuts at school sites and to continue reviewing district central services before recommending changes that would directly affect classrooms. The board approved the staff recommendations and directed further analysis to come back for public consideration.