Rapid City Area Schools board approves preliminary FY26 budget after wide-ranging finance presentation

The Rapid City Area School District 51-4 Board of Education approved a preliminary fiscal year 2026 budget after a detailed presentation by Chief Financial Operations Officer Sean Sasse outlining revenue and expenditure projections across the district's major funds.

Sasse told the board the district's general-fund ongoing revenue is essentially flat for FY26 after excluding federal program dollars the state requires be reported inside the general fund. "When we back all the federal programs out and we look at our regular ongoing revenue sources ... it looks basically flat," he said, adding that projected general-fund revenue of about $103 million would not cover projected general-fund expenditures of roughly $105.9 million, producing a preliminary deficit of about $2.8 million.

Sasse said two district priorities shaped the draft: a conservative enrollment estimate (12,050 ADM) and continuing to address employee compensation and placement schedules. He noted an increased local property-tax burden and a reduction in state aid driven by declining enrollment and rising local valuations. "Even though our local taxpayers are bearing a higher burden of the cost of the educational system, we're not seeing new revenue," he said.

The presentation separated the three major funds: general fund, capital outlay and special education. Capital outlay showed roughly $32.6 million in projected revenue and a projected $7.2 million surplus in the preliminary numbers; Sasse said much of that surplus will likely be used for the Rapid Valley expansion project once plans are finalized. The district is budgeting approximately $8 million for facility projects next year and is preparing a capital-outlay budgeting resolution for the board to review before the final budget.

Sasse warned the special-education fund needs careful management. He said projected special-education revenue for FY26 is $24.5 million and expenditures $31.2 million, creating a projected deficit driven largely by salary and benefits increases and by a temporary loss of state aid because the fund currently carries an excess fund balance. "As we spend that fund balance down ... state aid will incrementally start to come back," Sasse said, noting that if the fund received full special-education state aid it would largely close the projected shortfall.

Board discussion touched on multiple budget details: how property valuation growth does not translate directly into district revenue, the mechanics of state aid, and capital-outlay strategy. Board member Troy Carr and others highlighted that the district has consistently invested in facilities and that capital outlay reserves are intended for a longer-term facilities plan, not for day-to-day operations. Board members also asked for clearer breakdowns of school-level gains shown in district surveys and asked staff to continue work on enrollment monitoring because it is a primary driver of state aid.

After discussion the board voted to approve the FY26 preliminary budget as presented. Sasse said the board has until the state deadline to make adjustments before adopting a final budget.

The board also discussed next steps for capital-outlay planning and said a more detailed facilities report and a proposed capital resolution would be on a future agenda.

The approved preliminary budget will be refined between now and the final-budget meeting, with adjustments expected for negotiated settlements and for any additional project commitments that develop before October.