Keystone Oaks SD projects $4M shortfall and proposes 3.5% tax increase under Act 1 index

Keystone Oaks SD officials presented a draft 2026–27 general fund budget that would raise the district’s property tax rate by the state Act 1 index (3.5%), producing a proposed millage of 22.7122% and leaving a projected deficit of about $4 million.

The presenter, addressed in the meeting as Mr. Cubia, told the board the proposal reflects zero‑based budgeting and updated cost estimates, including an 8.3% rise in health insurance. He said projected revenues are about $50.7 million while expenditures total roughly $54.88 million; even with the index increase the district faces a multimillion‑dollar gap and a decline in fund balance from roughly $11–12 million to about $6.6 million by the end of next fiscal year.

The shortfall is driven in part by required bond payments tied to an elementary school remodeling project, which the presenter said will add about $2 million in annual obligations. He also said assessed values declined by roughly $13.5 million this year—largely because vacant businesses filed tax appeals—and that each 1% of millage yields about $283,000 in revenue for the district. Raising taxes to the 3.5% index is projected to generate about $741,000 of additional revenue.

“I work through cutting what’s actually needed, what’s not,” the presenter said, describing the district’s zero‑based approach instead of applying flat percentage cuts. He told the public he has already trimmed approximately $445,000 in expenditures since last month but said there is little left that can be cut without eliminating programs for students.

Residents who spoke during public comment urged caution on tax increases. Robert Myers, a longtime resident, said his property taxes now consume about 20% of his income and warned, “Property taxes are killing us.” Susan Walsh, another resident, said she learned last August that school taxes effectively rose to 4% and urged the board to pursue grants or other offsets to reduce pressure on retirees and households on fixed incomes.

Board members and staff noted the district seeks grant funding where available and that some state funds have supported specific projects, such as an upgraded security system at the high and middle schools. The presenter said federal and state funding account for only a minority of the district’s revenue (about 30% from the state; local real‑estate taxes provide roughly 69% of revenue).

The board did not vote on the budget at this meeting; the presenter placed the draft on public notice and recommended the board approve the index increase next week to partially address the shortfall. A motion to adjourn and a second followed, and the board said it would return to executive session to discuss personnel.

Next steps: the board is scheduled to consider and vote on the final 2026–27 general fund budget at its next meeting.