District 622 approves preliminary FY27 budget, flags need for operating levy as costs rise

Independent School District 622 directors on Wednesday approved preliminary fiscal year 2027 budgets and a set of June budget revisions while administrators warned that rising costs and flat revenue may force an operating levy on the November ballot.

"By law, school boards are required to approve a balanced budget by June 30th for the upcoming fiscal year," the district's finance presenter told the board as he opened the FY27 presentation. He said the board is being asked to approve a budget built on current assumptions, with the expectation the district will make adjustments during the year.

The board's proposed general fund for FY27 projects revenues and expenditures of $203,873,884, with roughly 78% of general fund spending tied to salaries and benefits. Administration said that the budget rests on several assumptions: a 2.69% increase to the state basic formula allowance, flat overall enrollment, and modest changes in compensatory and special-education revenue streams.

Finance staff walked directors through the district's nine funds, noting examples including nutrition services (about $10.2 million in revenue and $10.3 million in expenditures, supported by a significant fund balance), community education (about $12.8 million revenue and $13.3 million expenditures, with a planned $471,000 spenddown), construction projects (~$7.6 million planned expenditures), and a debt service fund projected at about $28.4 million tied to previously authorized levies.

The presenters said the district trimmed about $330,000 from the carryover target after refining expenditures, including roughly $200,000 in lowered salary placements (new hires placed lower on the pay scale) and about $130,000 in purchased-services reductions. They also said the district has enacted larger reductions in prior years to address structural shortfalls.

"We have structural deficits on our budget model moving into the future," the presenter said, adding that inflationary increases for utilities, insurance and other operating costs continue to pressure the budget.

Board members pressed for specifics about where the salary savings came from and how the district plans to close recurring gaps. Administrators said some savings reflect timing and vacancies; they also underscored that the budget is a living document and that school districts routinely revise budgets after actual enrollment and staffing are known.

Directors voted to approve the preliminary FY27 budgets as presented. The board also approved June 2025-26 budget revisions, which include an approximate $1.8 million reduction in salaries and wages driven by mid-year vacancies and timing differences and a modest benefits increase to align benefits accounting.

In addition to the budget actions, the board accepted several donations under Minnesota statute 123B.02, including a $840.99 contribution from Scooter's Coffee to support Beaver Lake Early Childhood, $5,000 from Evans Transportation Services to support Black Student Union activities at North High School, and musical-instrument donations from former teacher Jeff Linham.

Operations staff presented the district's FY27 insurance renewal quotes from Geary Insurance. The estimated total premium is $2.385 million, an increase of about $204,000, or 9.4%, from the prior year; administrators attributed much of the rise to broader market conditions and higher liability, umbrella and auto costs. The board approved the renewal.

Administrators also brought the district's required long-term facilities maintenance (LTFM) 10-year plan to the board for approval. The plan estimates the LTFM levy for fiscal year 2028 at about $5.4 million and noted that $24 million in facility maintenance bonds issued earlier in spring 2026 will fund projects through mid-2028. The board approved that plan by roll call.

Separately, the board approved a set of election-related resolutions: calling a special election to run in conjunction with the state general election on Nov. 3, 2026 (for three board seats and an operating levy), establishing the election clerk assignment, and setting the district's affidavit-of-candidacy filing period from July 14 to July 28, 2026 (a $2 filing fee required). The board amended one resolution to remove language referencing a capital project levy and recorded roll-call votes where required.

Superintendent Tucci Osorio and finance staff emphasized the continuing fiscal challenges facing the district and noted that because the state funding increase is modest and costs are rising, the district is likely to ask voters this fall for an operating levy to preserve programs and services. Administration said it will include explanations in the district's FY27 budget book and other communications ahead of any ballot question.

The board set its next work-study session for Aug. 10 and its next business meeting for Aug. 17. The meeting adjourned after brief recognitions of student-athletes and retiree acknowledgments.