Savannah-Chatham County schools approve $704.7 million FY2027 budget, tap $17.18M in reserves to bridge revenue gap

The Savannah-Chatham County Board of Education voted June 24 to adopt a fiscal year 2027 operating budget of $704,710,183, approving a plan that relies on $17,181,320 in unassigned fund balance to smooth a revenue shortfall while maintaining a proposed combined millage rate of 17.331 mills.

Superintendent Dr. Watson urged the board to back what she described as a budget that "I believe in," saying it balances stewardship of taxpayer dollars with investments the district needs to operate and to support its strategic plan. The spending plan reflects a 3.3% increase from the district's most recent revised authority and prioritizes employee compensation and student-facing investments.

Alvarez & Marsal Public Sector Services, the district's outside advisors, told the board the recent growth in spending is driven almost entirely by salaries and benefits and that the district faces a changing revenue environment. "Salaries and benefits have driven most of the growth," Mike Potter of Alvarez & Marsal said during the presentation, noting that personnel costs accounted for roughly 96% of the total increase between fiscal 2023 and 2027.

Board members pressed staff and A&M on several points during a multihour discussion: how growth percentages are calculated, the number of staff supported by grant funding, and the fiscal impact of state-mandated programs. A&M officials said grant-funded programs touch an estimated 900–1,000 employees and that recent state policy changes will limit future tax-digest growth.

One specific driver discussed in detail was literacy coaches required by a recent state law (HB 1193). A&M said the state estimates the program at $1.8 million and a local share of $684,000, but when the district applies local pay scales and benefits the fully loaded cost could be about $3.6 million, leaving an estimated net local cost of about $2.4 million.

School finance analysis also flagged the effect of HB 782, a change to how homestead property values are treated for taxation. A&M said the exemption effectively froze certain 2025 base values for eligible homesteads and reduced taxable digest growth, removing an estimated $8.7 million in potential revenue the district otherwise would have seen.

Faced with slower tax base growth, modest enrollment declines and several expiring grants, A&M recommended a modest, one-time use of reserves while the district completes a staffing review and other structural changes to align future budgets with likely revenue. The plan would leave the district with an unassigned fund balance roughly $35.2 million above the board policy minimum after the planned use.

Board members debated the proposal's trade-offs. Some said the district should use the fund balance sparingly and prioritize structural changes next year; others warned that reducing compensation now could imperil retention. "If you go too low, schools will start to feel it because they'll start losing teachers," A&M said when asked about compensation choices.

The board approved the budget by voice vote and then recommended a 17.331 millage rate to the Chatham County Commission; final millage adoption is scheduled for July 15 after the board's millage hearings on July 8. The budget resolution includes language allowing amendments to reflect the final digest and any changes required after the millage is set.

Next steps: the district will present the budget for public millage hearings on July 8 and adopt final tax rates on July 15. A&M and district leaders said they will continue work this fall on a staffing assessment and other structural options to reduce recurring costs and avoid future draws on reserves.