Budget work session: staff warn of $1.5M FY27 deficit, discuss millage and program tradeoffs

District budget staff presented an overview of fiscal year projections and potential policy choices for FY27 during the board’s work session.

Mr. Haven (budget lead) said the FY26 budget closed with roughly $75.1 million in revenues and $75.6 million in expenditures and that audited fund balance stood at about $24.5 million (roughly 32% of expenditures). He reported a projected $1.5 million deficit for the current fiscal year driven in part by prior year encumbrances (notably furniture and painting purchases), classified bonuses and increased fringe costs. "We're looking at a $1.5 million expected deficit," he said.

Staff outlined drivers and options: moving some positions to state fund 329 (career and technical education) will shift roughly $600,000 in salary costs off the general fund; employer health insurance budgeting increased by an estimated $150,000 to reflect more employees carrying family coverage; bus transportation lines must be corrected after a Harris accounting software transfer glitch that under‑budgeted historically funded salaries; and a proposed $2,000 across‑the‑board line adjustment for teacher scales would add another roughly $600,000.

The presenters also reviewed discretionary proposals and savings, including administrative reorganizations that could save an estimated $95,000–$145,000 by suspending or reallocating positions and using stipends to cover redistributed duties. Other line items discussed as possible additions or pressures: maintenance/janitorial contract (+$300,000), energy (+$300,000), device/technology increases (+$75,000), library materials (+$11,000) and athletic/AD equipment replacement (+$25,000).

Revenue options and external pressures were discussed: local reassessment drives approximately a $1.0–1.4 million increase in local revenue projections, but changes in state funding rules and recent legislation may offset gains. Staff noted House Bill 3858, which lowered the watercraft tax from 10.5% to 6% effective Jan. 1; that change is projected to reduce district collections by about $170,000 in FY27 and a larger amount in FY28.

Millage mechanics were reviewed: the district can increase operations millage up to four mills without county council and legislative delegation approval; each mill is estimated to raise $120,000–$150,000 depending on assessed values. Board members discussed the tradeoffs of using fund balance, increasing millage, or making program cuts and emphasized the need to avoid repeated deficits that would exhaust reserves. Staff said a one‑year deficit could be managed without issuing a tax‑anticipation note but warned that sustained deficits are unsustainable.

Next steps: staff will meet individually with trustees before the May work session, provide more detailed scenarios (budget A/B/C/D), and supply a board summary if the trustees defer the annual superintendent evaluation this year.