Kyrene school board previews balanced FY2026–27 budget as enrollment drop trims $3.5M in state funding

Associate Superintendent Chris Herman presented the proposed FY2026–27 financial picture to the Kyrene Elementary School District governing board, saying the district expects a decline of about 593 students that reduces state "group A" funding by roughly $3.5 million and leaves ongoing M&O revenue down about $200,000 versus the prior year after offsets.

Herman said staff are using a 2% inflation assumption from the state ($1.7 million) while the legislature has not yet enacted a budget, and that the district's seven-year budget report is the starting point for decisions before a proposed-budget vote on June 23. "As of now, the state has not passed a budget for next year. So, the numbers we will review in tonight's presentation are still estimates," Herman said.

To balance the budget, Herman described a combination of permanent reductions and enrollment-driven staffing changes that together total about $4.9 million districtwide, including roughly $1.4 million associated with planned school closures and $900,000 in district-office reductions. He said school staffing allocations will adjust to enrollment formulas and produce roughly $2.9 million in staffing-related reductions, and that the district is not implementing reductions in force: "When reducing personnel costs, Kyne [Kyrene] always looks at attrition, reorganizing departmental work, retirements, or eliminating unfilled positions first," he said.

Herman told the board the mix of inflation funding, group B/experience-index increases and permanent reductions creates capacity to invest up to $4 million in permanent employee compensation for FY27. He also described $7.7 million of one-time expenditures budgeted for FY27, including $2.4 million in employee retention stipends, $1.7 million to cover special-education contracted premiums, $700,000 for operational costs (including contracted bus drivers), and $800,000 to fund 12 additional school counselors using classroom-site reserves.

On special education, Herman said revenues have risen but expenditures have risen faster, producing a multi-year funding gap that contributes to pressure on the general fund. He described the district's long-range "timeless spending model," which targets about 75% of spending in classroom instruction and guides right-sizing decisions to preserve classroom dollars.

Herman summarized the timing for adoption: the board will present the proposed budget and is scheduled to vote on the proposal on June 23, followed by a required public hearing on the adopted budget on July 7 and submission to the state by July 15. He cautioned that state action on a budget could change details and that staff will identify any changes at the June 23 meeting.

The presentation drew questions from board members about how demographer assumptions and school-closure capture rates were folded into projections and about the district's plan if grant funding for counselors changes; Herman said demographer input and closure effects were included in the projections and described using reserves or redirecting future grant receipts to maintain counselor positions if necessary.

Next steps: the board will review any state budget developments and consider the proposed FY2026–27 budget at the June 23 meeting before the public hearing and final adoption in July.