Fiscal Year 2026 Budget Planning

Edina Public Schools is excited to announce a new, enhanced Budget Reduction, Reallocation, and Revenue Generation (BRRRG) process where we will train staff and community members about school finance and budgeting. They will then educate people in their networks, creating a deeper understanding and conversation throughout the Edina community.

As a result of years of underfunding of education from the state and elevated inflation post-COVID, the District's operations became structurally imbalanced and required cost containment for fiscal years 2023 and 2024 in the total amount of $7,620,000.

Due to these cost containments and actual revenue exceeding conservative assumptions, we are excited to share that no cost containments will be necessary for fiscal year 2026. Education finance in Minnesota, however, has historically not kept up with the rate of inflation, and the District administration does not expect that trend to change. Therefore, the District's most recent financial forecast estimates deficit spending in fiscal year 2027 with a decline of fund balance below the acceptable level in fiscal year 2028. Because of this, the District is taking a more proactive approach to prepare for the possibility of significant cost containment in future years.

As part of this enhanced Budget Reduction, Reallocation, and Revenue Generation (BRRRG) planning process, the District is looking to recruit and collaborate with a new Budget Community Engagement Task Force to increase the overall understanding of school finance and garner greater community engagement about budget options.

Learn more about our forecast for fiscal years 2026-2030.

Community Meeting with Edina Public Schools

Budget Community Engagement Task Force

As we prepare for potential budgetary shortfalls in 2026-2027, we have invited community stakeholders to participate in our Budget Community Engagement Task Force. The goal of this task force is to increase the overall understanding of school finance and garner greater community engagement about budget options.

Task force members include parents/guardians, staff, students, board finance and facilities committee members, and other community members. Many members have informal and formal experience in communications, problem-solving, and data analysis skills, and experience in finance and/or school finance. A special effort was made to recruit stakeholders who are representative of our student body.

Throughout February through June, task force members will:

Engage in robust training on School Finance
Work in consistent small groups of 5-7 members to ensure strong engagement and multiple perspectives are gathered
Engage in whole group discussions to ensure the expertise in the room is leveraged in a strategic manner
Collaborate to analyze EPS and comparable school district budgets, and, in collaboration with administration, craft a set of options for the school board's initial review
Host small group meetings with community members within their networks to present school finance basics, the set of initial Budget Reduction, Reallocation, and Revenue Generation (BRRRG) options, and collect feedback from the small group meeting attendees

Task Force Timeline

Task force members will participate in two 2-hour trainings throughout February and March, and then will host trainings within their community. Community members should expect to be invited to one of these trainings sometime in April.

How Schools are Funded in Minnesota

Give Us Your Feedback

Let us know your thoughts and questions about the proposed enhanced BRRRG process and school finance overview as we prepare for budgetary shortfalls in 2026-2027.

Let Us Know

Basic Education Funding Formula for Public Schools Compared to Inflation

In the state of Minnesota, most of the general fund revenue for any public school district comes from the basic education revenue formula allowance, which is a per pupil revenue allotment. This is used to finance basic school operations, including, but not limited to: classroom teachers, paraprofessional staff, administrative support staff, regular to-and-from school transportation, custodial staff, utilities, insurance, and supplies and materials.

For fiscal years 2026 and beyond, the Legislature has put into effect that the formula will be indexed to inflation via the consumer price index. While this is an improvement to public school funding, it’s important to remember that the formula is capped at 3.0%, and education growth aid has greatly lagged behind inflation, as shown in the graph above. Also, this doesn't make up for the previous 20 years of underfunding.

FAQs

Why aren’t cost containments needed for the 2026 fiscal year?

Due to containments made the past two years, greater than anticipated investment income, a conservative revenue forecast, and efficiency protocols that helped us save money, we were able to avoid containments for fiscal year 2026.

While this is great news for the 2026 fiscal year, the District's latest financial forecast predicts deficit spending in fiscal year 2027 and a decline to the fund balance past the minimum required by Board policy in fiscal year 2028. Because of this, the District is taking a more proactive approach to prepare for the possibility of significant cost containment in future years.

What is the fund balance and why is it not used to manage the projected shortfall?

Fund balance is the residual value of the District’s yearly revenue minus the expenditure activity. As of June 30, 2024, the District’s unassigned fund balance was $9.2 million, which is 7.4% of the subsequent years' unassigned general fund expenditures. Prior to the BRRRG of 2024, increased expenditures stemming from high inflation and rising labor costs were expected to drop our fund balance to 5.6% at the end of fiscal year 2024. Due to the cost containments enacted in 2023 and 2024, as well as conservative revenue assumptions coming in more favorably, the District has been able to maintain an adequate level of fund balance in the short-term. Education finance in Minnesota has historically not kept up with the rate of inflation, and the District administration does not expect that trend to change. Therefore, the District's most recent financial forecast estimates deficit spending in fiscal year 2027 with a decline of fund balance below the acceptable level in fiscal year 2028.

Our School Board’s policy is to maintain the fund balance at a minimum of 6.0% of expenditures and a maximum of 10.0%. Using fund balance to compensate for projected shortfalls would, over time, bring our balance out of line with Board policy and deplete our fund balance to a dangerous level, jeopardizing our ability to make payroll, perform essential District functions, and plan for unexpected emergencies. Also, a declining fund balance may lead to a decline to the District's credit worthiness and loss of its Aaa credit rating. As an example, utilizing fund balance to support a structurally imbalanced budget it would be similar to using funds an individual has set aside for retirement to pay for ongoing, everyday expenditures.

Why is Edina Public School’s Aaa (or “triple A”) credit rating important and what would be the consequence of that rating being downgraded?

Edina is one of only three school districts in Minnesota, and 93 out of about 16,000 school districts in the country, that have an Aaa credit rating from Moody’s Ratings. As with personal credit, our credit rating determines the interest we are charged for debt - the stronger the credit rating, the lower the cost to borrow. We consider maintaining an Aaa credit rating to be one of the primary ways we define excellence in financial stewardship of district resources. A contributor to our premium credit rating is the strength of our general fund balance.

What do we prioritize as a district? (Our funding should match these priorities.)

How does open enrollment impact our budget?

Students are admitted to a district through Open Enrollment when the district has extra capacity above and beyond its ability to serve resident students. Open enrollment allows the district to efficiently use the educational space within our system, creating the financial sustainability that allows us to maintain all of our schools and programs.

In Minnesota, state aid follows the student, meaning that funding is transferred from a student's resident district to the district where they choose to attend school through open enrollment. As such, open enrollment does not negatively impact resident students, but in fact helps Edina schools function more efficiently.

Resources

FY 2026-2030 Financial Forecast

1/26/25 School Board Presentation

Strong Fiscal Management

Edina Public Schools continues to demonstrate strong fiscal management and maintain the coveted Moody’s Aaa credit rating. This recognition is not only evidence of our dedicated commitment to financial stewardship, but a top-tier credit rating also allows us to obtain better rates when the district issues debt, saving us money. We are one of just three districts in Minnesota and approximately 100 out of 13,000+ nationwide that have earned this distinction.

Constituent

Resource Navigation

Interior Pages Nav

Schools

Landing Nav

Breadcrumb