By Beth Downes, Municipal Advisor

The Annual Budgeting Process for Minnesota School Districts

Fall is an interesting time of year for school business officials.  In addition to staff and students being back in the buildings, all asking questions and for you to put out fires, you are in the middle of an intense mental load with crucial tasks coming due all at once.  You have to close out fiscal year 2024 and prep for your audit, analyze your enrollment for the fall and budget estimates for fiscal year 2025, and then you get the MDE email from that the levy information system is open!  Welcome to fiscal year 2026!

Your budget for fiscal year 2026 begins with inputting data into the levy information system and ADMWE during the summer and fall of 2024.  With so many state aids and revenue streams based significantly on enrollment, it’s particularly important to confirm you have reasonable estimates for your student counts.  Ensure you update actual prior year enrollment, including total residents, from the District and School ADM Report as you’re projecting future year enrollment.  Continuing to roll forward erroneous estimates from prior years could lead to significant under or over stating of your pupil counts moving forward, which in turn will impact your revenue streams and lead to inaccurate budgeting.

As the season changes from fall to winter, the focus will shift even more to the details of the 2026 budget.  This is the time to finalize enrollment projections, as well as discuss and finalize budget assumptions.  Working in tandem with your administration and school board, you’ll set a fund balance target, anticipate increases for contracts and other expenditures, and plan capital projects.   Salaries and benefits make up about 80% of operating expenditures in districts, which makes it vitally important to consider how contract increases will not only affect fiscal year 2026, but also subsequent years.

While the business office, the superintendent and a few other administrators may understand the details of the budget development process, your ability to keep your school board and community apprised of the process, especially as you are just getting started, is critical.  Consider building a clear and consistent financial message into your audit and Truth in Taxation presentations to begin laying the groundwork for the upcoming budget planning process.  Also, consider using a long-term budgeting model to project budget assumptions for five subsequent fiscal years.

Ehlers can help you manage all your fall activities with the following analytical services:

• Truth in Taxation Presentations
• Budget Projection Modeling
• Enrollment Projection Modeling

Right now, you’re living in three different fiscal years, and it can be overwhelming to juggle!  Make life simpler by setting a timeline to complete the 2026 budget components. Planning and forecasting are key no matter the size of your district, so set yourself up to predict enrollment as accurately as possible and remember to consider how decisions made now will affect future years’ operations.

Required Disclosures: Please Read

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