Petersburg officials unveil FY2027 budget that raises pay while absorbing big insurance and enrollment shocks
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Summary
Petersburg City Public Schools proposed an FY2027 budget that funds a large compensation package, absorbs a roughly 28% health‑insurance increase, and manages declining state revenue while planning a $53 million school construction as a one‑time capital investment.
PETERSBURG, Va. — Petersburg City Public Schools presented a proposed fiscal year 2027 budget at a public hearing that prioritizes pay increases for employees while absorbing a steep rise in health‑insurance costs and planning a one‑time $53 million capital project, officials said.
The budget presentation by Dr. Greenwood, PCPS chief financial officer, outlined initiatives totaling $3,000,000 that include a $2,800,000 compensation and classification study implementation intended to provide at least a 3% increase for employees. "The construction of the new school requires $53,000,000 in budget authority," Greenwood said, calling the capital funding a one‑time addition to the capital projects fund rather than an operating increase.
Why it matters: state revenue tied to student enrollment is declining even as fixed operating costs remain. Greenwood said the division forecasts enrollment easing to about 3,900 students in FY2027, and warned that the division has experienced a cumulative loss of roughly $6,800,000 in state revenue across FY2026–27. The K‑3 class‑size reduction grant is not expected to be available to PCPS for FY2027, removing about $2,200,000 in grant support the division had previously counted on.
The budget attempts to square those headwinds with local support and savings in other areas. Greenwood pointed to two state changes that partly offset costs: a Virginia Retirement System rate reduction—from about 14.27% to 12.2% of covered payroll—saving roughly $385,000, and an increase in the local composite index that shifts about $440,000 of state funding responsibility to the city.
Major cost drivers remain. Greenwood said health‑insurance premiums are projected to increase by about 28%, roughly $2,000,000, and that liability insurance would rise in the neighborhood of 5%. The division is examining alternatives, including a local choice cooperative (TLC) that could yield about $200,000 in savings, but Greenwood cautioned that transitioning plans would require maintaining a $1,200,000 reserve to protect the division during a changeover. "For FY2027, this budget must absorb the 28% increase in health insurance premiums while we plan for longer‑term solutions," he said.
To present a balanced operating budget, Greenwood said the division eliminated a $500,000 budget development reserve and removed a one‑time FY2026 cost; staff also reviewed vacancies and deactivated select positions to protect classrooms and core instructional services. He recommended process changes to strengthen long‑term finances, including a $3,000,000 fund‑balance target, a funded capital improvement plan, and a move to a needs‑based budget that starts from student needs.
Superintendent Brown emphasized the budget's focus on employees. She said, if approved, the compensation package would "start Petersburg teachers off, coming in, with 0 experience at $60,000," a change she described as a potential game‑changer for recruitment and retention.
Next steps: board members and staff said they will continue to reconcile final state budget numbers once the General Assembly reaches agreement and will update the proposal in an upcoming work session before taking it to city council. No formal vote on the FY2027 budget was taken at the public hearing.
