SPPS finance chief warns of early FY27 shortfall after enrollment dip

Tom Sager, the district’s executive chief of financial services, gave the board an early look at the fiscal 2027 outlook on Jan. 6, saying recent enrollment counts and flat funding formulas are creating budget pressure.

Sager told members the audited FY25 fund balance was about $51.9 million (roughly 6.65% of operating expenses) and that updated counts for FY26 and preliminary FY27 estimates show fewer students than previously projected. He said staff’s early model shows expenses could exceed revenue by roughly $15.1 million — a gap the presentation said could be managed to preserve a roughly 5% unassigned fund balance through disciplined cost containment and planned attrition.

Key assumptions in the FY27 draft include a 4% inflationary adjustment (about $30 million), partial-year costs for a new paid-family-leave benefit (roughly $1.4 million net), modest increases in special education and English-learner revenue, and an anticipated decline in compensatory aid of about $2 million because of changes in direct-certification reporting.

Sager recommended continuing to refine enrollment projections, finalize compensatory-aid estimates in February when MDE data are expected, and consider options such as staffing realignment, controlled hiring freezes and operational savings to close the modeled gap. He told the board that small changes in the revenue or staffing assumptions could materially change the net shortfall.

Board members pressed administration for more detail about where enrollment declines are occurring and about federal-title and community-education funding risks if federal allocations change. Staff said additional analysis and public engagement are planned: school and department budgets will be revised in March and the public engagement timeline runs through April before final action in June.