Northshore board hears 2026-27 budget showing balanced funds amid rising insurance and enrollment declines

The Northshore School District presented its recommended 2026-27 budget during a board study session, showing total revenues of $498.9 million and expenditures of $497.6 million and projecting a $1.3 million net increase in fund balance under current assumptions, district staff said.

Dr. Irish and budget director Chris Brennegan told the board the plan produces balanced budgets across the district's funds and would put the district at the board's 3% minimum fund-balance policy for the first time since 2021-22, with an anticipated $25 million in reserves by year end. "We will end up with an extra $1.3 million in fund balance at the end of the year," Brennegan said.

The presenters flagged several cost pressures that could erode that projected surplus. Staff said the district faced a $2.4 million insurance-premium increase in May, including a surprise $1.4 million component. They also cited rising utilities and continued growth in special-education costs, which make up roughly 20.8% of expenditures. "Special ed keeps growing," Brennegan said.

Enrollment projections were another concern. Staff reported a projected 246 full-time-equivalent student decline in 2026-27, concentrated in kindergarten, and said the district is holding about 10 hiring vacancies to see whether kindergarten counts improve before filling positions. "We're really just trying to get to the right number of teachers so that we have the least disruption possible," a presenter said.

Staff emphasized that the budget numbers do not include anticipated increases from ongoing labor negotiations. "The numbers that you see as ending fund balance are not going to be that number when we actually close the year," Brennegan warned, noting settlements could lower the projected balance.

The budget presentation also showed revenue composition and key assumptions: about 70.4% of revenue from the state, 19.8% local (mainly levy), and federal sources at 6.5% before removing a $25 million capacity allocation (which makes federal resources roughly 2.5% on an adjusted basis). District staff attributed a $32.5 million revenue increase to levy collections, the state's implicit price deflator, and other formula changes.

On compensation, staff said total compensation accounts for 82.4% of the budget and climbs to 86.8% when the $25 million capacity item is removed. A board participant cautioned that districts above 86% of compensation-to-budget have faced "binding conditions," a financial stress signal the board said it would continue monitoring.

Staff outlined next steps: this was the first formal budget hearing and the district intends to adopt a final budget on Monday, June 13; staff will update the numbers after labor settlements and again in the normal November closeout process.

The board allotted one minute for additional questions and proceeded to the next agenda item.