The Douglas County School Board on Tuesday previewed its proposed 2026–27 budget amid declining enrollment and a projected $22 million deficit.

District officials said the shortfall will be partially covered by a one-time drawdown of the district’s general fund, bringing the balance in line with pre-COVID levels.

However, leaders warned the approach is temporary and will require more permanent solutions in the following year.

“Without a structural change to how we fund schools in this state, there is at least a substantial risk that next year’s budget would not just be lower but substantially so,” board member Brad Geiger said. “Any substantial decrease in our budget means decreasing employees.”

The proposed $901 million budget outlines less than a 1% increase in overall spending compared with the current year. District leaders said the largest budget priority remains investing in employees, with more than $15 million dedicated to salary and benefit increases aimed at recruiting and retaining staff.

At the same time, the district is grappling with declining enrollment.

Although per-pupil revenue is increasing this year, officials said the gains are offset by fewer students. The district projects a loss of 467 neighborhood school students, about a 1% decline. 

Enrollment has decreased for seven consecutive years, officials said, with further declines expected.

The district’s Fiscal Oversight Committee outlined challenges in a memo to the board, noting the planned use of reserves will bring the fund balance close to the district’s target range of 4% to 5% of expenditures. While the committee said the proposed budget maintains that target, it warned that additional reductions could affect the district’s long-term financial stability.

In addition to enrollment declines, the committee identified several risks that could impact future budgets, including possible changes to state funding formulas, the depletion of the State Education Fund and broader state budget pressures.

On the spending side, rising costs for transportation, facilities and employee benefits are expected to continue to strain the district, the memo said.

The proposed budget includes targeted spending increases of $6 million for district-managed student programming, $3 million for transportation and facilities and another $3 million for systemwide support services.

Those increases are partially offset by about $20 million in savings from the current fiscal year, including staffing adjustments and vacancy savings.

Despite the financial outlook, the Fiscal Oversight Committee recommended its approval and concluded that the proposed budget is “reasonable and represents a necessary plan.”

“It is imperative that the district maintains significant restraint in overseeing both current spending and its future growth,” the committee wrote.

The Douglas County School Board is scheduled to vote on the final budget before the June 30 deadline.