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Finance team previews FY2026 budget with $22.7M planned fund‑balance draw and multi‑year deficit risks
Summary
John Morstead and business services staff presented the proposed FY2026 budget and two forecast scenarios showing a planned $22.7 million draw on fund balance for FY26, operational reductions of roughly $13 million across the forecast window, and a potential statutory operating debt risk in later years without additional reductions. The board will vote on adoption on June 24.
John Morstead, executive director of finance and operations, introduced the proposed fiscal 2026 budget and five‑year forecast, calling it the culmination of the district’s long‑range financial planning process. "June represents a culmination of our long range financial planning process over the past year," he said as he described updated revenue assumptions and stresses in expenditure growth.
Kelly Binusa, director of business services, walked the board through the general fund details and scenarios. The proposed budget includes a planned decrease to fund balance of approximately $22,700,000 for FY26 and a projected year‑end fund balance of roughly $88,300,000 (about 25.4% of expenditures) under current assumptions. The presentation showed operational reductions phased across the forecast (totaling in the low‑to mid‑teens of millions depending on the model) and cautioned that without these reductions the fund balance could turn negative in later years, triggering statutory operating debt requirements and requiring an SOD recovery plan.
Staff emphasized assumptions that shaped the forecast—CPI‑linked increases to the general education formula (about 2.74% for FY26), projected 3% annual expenditure growth (with a possible future adjustment toward 3.5% because of transportation and settlement pressures), and delays in some capital and site start‑up costs. Next steps are to incorporate the legislature’s final actions into the forecast and present the adopted budget for board approval on June 24.
