Kyrene CFO outlines FY2025–26 budget response to enrollment decline, rising utilities

Kyrene Elementary District Associate Superintendent and Chief Financial Officer Chris Herman told the governing board on June 10 that next year’s proposed operating plan balances ongoing general-fund revenues and expenditures while adjusting for declining enrollment and higher utility costs.

Herman said the district expects a net loss of 761 students for 2025–26 compared with the prior-year budget, a change he estimated will reduce state maintenance and operations (M&O) revenue by about $4,100,000. At the same time, Herman said the district is assuming the maximum state inflation funding (a 2% statutory inflation adjustment) of about $1,800,000 for the coming year.

Herman told the board those two headline items, combined with an expected $1.5 million increase in utilities, require the district to reduce recurring expenditures by $4,200,000 for 2025–26. He described $900,000 of those reductions in district-office budgets (including about $339,000 in lower personnel costs and $265,000 in lower contracted services) and another $3,200,000 coming from school budgets, which he said equates to roughly 46 full‑time equivalent positions overall but that most reductions were achieved through attrition and retirements rather than layoffs.

The presentation separated ongoing versus one-time items. Herman said the proposed budget includes $7,400,000 in one-time expenditures that the district intends to fund partly from unspent balances in the current year and prior carryforward amounts. Those one-time items include a $2,400,000 pool for employee stipends, $1,800,000 to cover contracted special-education premiums, roughly $300,000 for contracted bus-driver premiums, and $2,800,000 set aside for multi-year strategic-plan initiatives.

Herman also reviewed long-term trends: the district has implemented roughly $24.3 million in permanent expenditure reductions over the last nine years, largely in personnel, which he said accounts for about $21 million (86%) of that total. He characterized the district’s approach as “rightsizing” through vacancy management, reorganization and natural attrition while preserving classroom spending; he said Kyrene historically spends about 75% of operational dollars in classroom-related categories.

On special education, Herman showed an ongoing gap between growth in special-education expenditures and revenues and said federal funding represents about 15% of special-education funding while most is funded through state sources and local budgets. On employee pay, the presentation included a 19‑year history of average teacher base salary; Herman said the 2025–26 budget projects an average base teacher salary just over $59,000 and that a $1,200,000 placeholder for compensation in the budget equates to roughly a 1% across‑the‑board increase.

Board members asked clarifying questions about the composition of “student support” and “instructional support” line items, SRP utility rate differences among campuses, and contingency planning should the state delay passing its budget. Herman said the district maintains reserves and cash balances sufficient to manage temporary timing delays in state aid and that the general fund’s ongoing revenues and expenditures are essentially balanced in the proposed budget (Herman showed ongoing general‑fund revenue of approximately $112.2 million versus ongoing expenditures of about $112.3 million, and he said smaller special‑revenue fund balances could cover a modest gap if final calculations change).

Why it matters: the budget determines staffing and program capacity across the district. The board must hold a public hearing and vote on a proposed budget on June 24 and then adopt a final budget in July for state submission by July 15, assuming the legislature and governor complete the state budget in time.

The board did not vote on the proposed budget itself at the June 10 meeting; Herman said the next formal actions are the public hearing and proposed‑budget vote on June 24.