Kenosha Unified warns of multi‑million dollar shortfall as state reimbursements lag
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Summary
District finance leaders told the Audit, Budget & Finance Committee they project revenue increases of $1.7–3.0 million next year but face expense pressures of about $18.8 million, leaving a $15–17 million shortfall unless the district trims costs or seeks new revenue.
Kenosha Unified School District officials told members of the Audit, Budget & Finance Committee on Tuesday that state funding changes and rising operating costs have created a significant budget gap for the 2026–27 fiscal year.
CFO Tarek Hamden told the committee he and his team simulated next year’s revenue under the state revenue‑limit formula and expect roughly $2.6 million more in revenue from a $325 per‑pupil increase, offset by projected enrollment declines. But he said uncertainty in special education reimbursements from the Department of Public Instruction (DPI) is the largest immediate risk to the district’s estimates.
Hamden said DPI recently signaled it may fund special education categorical aid at about 35% rather than the 42% figure cited in the state budget, and the district budgeted conservatively at 39%. Based on last year’s reported aidable special education expenses of roughly $43.1 million, Hamden said the district planned for about $16.8 million in reimbursement at 39% but that a lower percentage could reduce revenue by roughly $1.8 million for the current year.
Those revenue assumptions are only part of the picture. Hamden outlined expense pressures that, taken together, add approximately $18.8 million in new costs in his simulation: a proposed $1.5 million curriculum adoption request, a $1.3 million instructional technology refresh, potential increases of about $1.4 million to the student transportation contract, health‑insurance cost increases capped at 9.9% (estimated at roughly $4.1 million), salary‑schedule moves and a modeled CPI increase, and a proposal to add about 15 FTE to increase teacher prep time (estimated $1.5 million net).
Using the district’s modelling, a best‑case revenue outcome of about $3 million would still produce a roughly $15.8 million structural shortfall; Hamden said a more conservative revenue figure of $1.7 million would leave a shortfall near $17 million. He described the gap as a structural problem driven largely by limits in the state revenue‑limit formula and declining enrollment.
Hamden said the only ways the district can exceed the state revenue cap are either to reduce expenses, find other revenue sources, or ask voters to approve a referendum to exceed the revenue limit. He advised the committee that DPI finalizes some reimbursements late in the cycle and that the district will continue to refine projections before the June fiscal‑year deadline.
The committee heard questions from board members about how FTE and per‑pupil calculations were made, how the district uses reserves and investments for cash flow, and how the district audits submitted special‑education costs. Hamden emphasized the preliminary nature of the projections and called for continued discussion with the full board on possible options.
Next steps: district staff will continue refining assumptions, provide follow‑up data to the committee, and present recommended options to the full school board as budget choices are finalized.
