District finance staff told the Finance Committee Oct. 15 the district is beginning the 2026–27 budget process with a needs‑based approach and a working Act 1 index placeholder of 3.5 percent while it evaluates whether to pursue exceptions.

The administration recommended $535,000 in transfers from budgetary reserves to cover known expenditures: a $130,000 refund for a multi‑year assessment appeal and $405,000 to meet incremental special‑education costs, funded partly from the special‑education reserve and partly from the general reserve. Finance staff described the transfers as necessary to cover expenses that are already known or are expected this year.

Finance reported that the state budget remained unsettled and that roughly $3 billion in state funds had not been released, but the district is not yet operationally affected because about 80 percent of its revenue is local. The district also reported year‑to‑date collection strength and that tax receipts were slightly ahead of last year.

The administration outlined multiyear assumptions: flat enrollment for now; an Act 1 index placeholder of 3.5 percent in the preliminary model; employer PSERS contributions remaining elevated; and continued exposure to assessment appeals. The finance office estimated potential lost assessed value from recent appeals (commercial and residential) could reduce revenue in coming years and said it is monitoring land‑development activity that could offset losses.

Board members asked how persistent special‑education overages might be; administrators said some costs are already invoiced through the MCIU cost plan but that additional need could materialize depending on student placements and new enrollments. Committee members also raised concerns about possible funding changes at the intermediate unit (MCIU) and other federal/state program risks; administrators said they will continue to monitor and adjust assumptions as information becomes available.

Finance staff said the next steps are a series of budget presentations through May with a proposed final budget in June; the committee will consider whether to adopt a preliminary budget that allows exceptions above Act 1 or to hold to the Act 1 index.