Des Moines schools present FY27 budget with $17.9 million gap; proposes tax rate rise to 16.05

Matt Smith, interim superintendent for the Des Moines Independent Comm School District, and Shashank Arora, the district's chief financial officer, laid out the district's proposed fiscal year 2027 budget during a virtual forum and said the plan faces a roughly $17.9 million shortfall.

Arora said the district is proposing a property-tax rate increase from 14.61 to 16.05 for FY27, with the largest driver the debt service tied to the voter-approved bond. "The increase if you see is 1.44," he said, adding that the new debt service was approved by voters and is responsible for a large portion of the change.

Why it matters: the district's general fund accounts for the majority of operating dollars and pays for staff, building operations and classroom programs. Arora told attendees that roughly 77% of the district's revenue is funneled into the general fund and that the district's all-funds revenues total about $490 million, with 83% of general-fund spending targeted to direct student and building needs.

Arora described Iowa's student-driven funding formula and the district's spending-authority constraints. "State controls the maximum amount each district can spend, and it is illegal for a school district to exceed its total spending authority," he said, noting that a district that goes negative must submit a corrective plan to the Iowa Department of Education and that, in extreme cases, the state could take over operations.

Enrollment losses are a central pressure on the budget. Arora said the district has lost more than 2,600 students since 20182019 to 202526 2026, which he estimated reduces revenue by about $21 million. He projected continued declines of roughly 550 students per year over the next four years as charter schools, ESA vouchers and nonpublic enrollments increase, estimating those losses at about $4.5 million annually.

On revenue assumptions, Arora said supplemental state aid for FY27 is estimated at 2%, and that the budget guarantee mechanism should add roughly $2.8 million to the district's revenue this year, provided the board approves the guarantee.

Budget math and the gap: Arora reported projected FY27 cost increases of about $24.5 million driven by salaries, benefits and program expansions. After expected state funding and ESA-related reimbursements of roughly $6.6 million, the district faces the $17.9 million gap.

Steps to close the gap: Arora listed planned reductions and revenue actions totaling the bulk of that amount. Key items he identified included closing Walnut Street (approximately $2.2 million in savings), implementation of new staffing standards (about $8.1 million), an early-retirement option (around $1.0 million), anticipated facility sales and timing conservatively budgeted (combined sales proceeds roughly $3.3 million or a bit more), and a change in the employee health plan plus a targeted family surcharge estimated to save about $4.2 million. He said the district also expects to use roughly $1.5 million of available spending-authority/fund balance to help balance the budget.

Arora said the district is being cautious in its revenue and real-estate assumptions, noting some property sales are being deferred in the budget to avoid overstating proceeds. He also emphasized legal limits on how fund balances can be used, saying some funds cannot legally pay staff salaries and transfers between funds require documented loans and board approval.

The presentation also highlighted that two-thirds of district spending is instructional and student support, with instruction alone accounting for about 48% of expenditures — a reminder, Arora said, that compensation and classroom services are the largest single cost driver.

Next steps and public input: the district set up an inbox (budget@dmschools.org) for questions and asked the public to submit questions by April 17; Arora said the district expects to post responses by the morning of April 21 and that the board is scheduled to consider the budget in April.

The district did not present any formal motions or votes during the forum. The presentation focused on assumptions and options; the board will review the formal budget documents at its upcoming public meeting.