Winona schools map $1.2'$1.6M budget gap; district pursuing IRA tax credit tied to geothermal/HVAC work

Winona Area Public Schools' business staff presented preliminary 2026 budget targets and warned the board that, under current assumptions for salary increases, transportation-contract inflation and the district's desired 8'10% fund balance, the district may need to reduce expenditures by roughly $1.2'$1.6 million to meet board targets.

Key assumptions: the draft budget uses the board's previously adopted assumptions: a 2% salary increase assumption for bargaining units, an increase in the Teachers Retirement Association contribution rate (from 8.75% to 9.5%), and an assumed transportation contract increase (staff used 2.5% as a starting estimate but warned the final settlement could be larger). Finance noted that depending on whether the board measures fund balance by the unassigned portion or the operating portion of the budget, the dollar adjustments differ.

Revenue and tax credits: staff reviewed estimated general-fund revenues (total roughly $43.3 million with $34.7 million unreserved) and told the board the district is pursuing tax credits tied to an HVAC/geothermal project. The district expects two baseline options: a 6% federal tax credit on qualifying components or a larger 30% credit if the project meets prevailing-wage and apprenticeship requirements. District consultants (Baker Tilly) continue to prepare the filing, and the district has incurred change orders linked to prevailing-wage determinations (two large change orders in the low hundreds of thousands were discussed) that staff said had been processed.

Timing and risk: staff said a tax-credit filing cannot be made until after the close of the district's fiscal year; if filed in July the consultant's initial estimate was that the IRS might issue net funds within months, but staff cautioned processing time and potential policy changes in Washington introduce material uncertainty. Directors said the district should monitor the policy landscape and reminded staff that if the tax-credit outcome is delayed or reduced, the board would need to rely on other adjustments to meet fund-balance goals.

Board direction: directors asked staff to return in February with a second look at ADM-based revenue projections, updated enrollment figures and a set of options showing targeted reductions and contingency measures. Staff offered to meet with new board members to review the budget spreadsheets in detail.

Budget actions and next steps: no formal budget reductions were adopted at this meeting; staff identified the $1.2'$1.6M range as the adjustment needed to secure a 10% fund balance using current assumptions and asked for board guidance on the target and negotiation buffers.

Sources: presentation and discussion with Director Kevin Sloane (business services) and Superintendent Brzezinski.