Breaking Down Lakeville's School Revised Budget: What Changed Since June

The Big Picture

The district expects the general fund balance to grow to about $29 million by the end of this fiscal year. That's an increase of $3.2 million to $3.3 million from last year.

That sounds like great news. But there's a catch.

The district's policy goal is to have a fund balance equal to 10% of expenditures. Right now, they're at 8.3%. They're still about 1.5% short of where they want to be.

Where The Money Is Coming From

The district is seeing increases in several revenue areas:

Interest Earnings: The district now has enough money in the bank that it's actually earning interest. This wasn't happening before when fund balances were lower.

Special Education Billing: Third party billing for special education students is up about $400,000 from what they expected. This is money the district gets reimbursed for one on one support staff.

Building Rentals: The district increased rental rates to actually cover their costs when other groups use school buildings. That's bringing in about $200,000 more than last year.

Athletic Fees: Gate fees and other charges from athletic events are up a couple hundred thousand dollars.

State Funding: Overall state funding is up about 4%. This comes from three places. The state gave all districts 2.75% more money. Lakeville has slightly more students than expected. And some categorical aid increased.

Property Taxes: This is actually going down. The district levied too much money two years ago when they thought enrollment would be higher. Now they have to give some back. This is a one time decrease for fiscal 2026.

Similar property tax adjustments happened recently in District 196, where the levy increased 12.8% for 2026.

Where The Money Is Going

Total expenditures are up 5.73% from last year. Here are the biggest changes:

Administration Costs Are Down: The district is spending less on administration than last year. Why? Last year they paid for more than one superintendent during the transition. Now they're back to normal.

District Support Services Are Up: Some reorganization happened with executive director positions. This cost more than the previous structure.

Elementary and Secondary Education Up 4.6%: This is mostly staff salary increases. The district also hired some new teachers because enrollment was higher than expected.

Vocational Education Up 37%: This number jumps around every year. Vocational dollars can only be used on 10th through 12th grade students. Sometimes a vocational licensed teacher teaches some 9th grade classes and the district can't get reimbursed for that. This year they're doing a better job tracking who qualifies.

Instructional Support Services Up 9%: The district added assistant principals and deans this year. These positions fall under instructional support.

Pupil Support Services Increasing: New counselors were added at the secondary level. Transportation costs are also in this category.

Insurance Up: Health insurance markets are increasing about 10% per year right now. The district's increase is actually slightly less than that.

The $800,000 Problem

Here's something that might affect future budgets.

The internal service fund pays for employee health insurance. The district is projecting this fund will be about $800,000 short by the end of the year.

Why? More employees are bringing their spouses onto the district's health plan because it's better coverage than what's available elsewhere. Claims have also been higher than expected.

The district can borrow money from the general fund to cover this. They don't have to just eat the $800,000 loss all at once. But it's still a real cost that has to be dealt with.

Business Services Director Bill Holmgren said insurance is "starting to squeeze us" and they expect big increases next year.

These budget changes are also impacting how the city handles housing regulations, specifically regarding Lakeville's new short-term rental rules.

Other Funds

Student Nutrition Fund: Expected to drop about $151,000. This is planned. The fund balance was too big, so they're spending it down on new equipment like coolers and freezers.

Community Service Fund: Small increase of about $30,000. They're working to recover from losses a few years ago.

Building Construction Fund: This will increase almost $10 million because the district plans to do a bond for Long Term Facilities Maintenance. They're borrowing about $21 million at the end of March.

What The Superintendent Said About The Future

Superintendent Michael Bowman was blunt about the district's financial future.

He's been costing out all the things people have asked for. Seven period days at the high school. Smaller class sizes. Expanded arts and music programs.

His conclusion? "The general education formula is never going to get us where we would like to go."

That means if Lakeville wants to add these programs, it will require operating levies or future bonds. The state funding formula alone won't cover it.

Bowman said he's working on putting together actual cost estimates for these improvements. Then the board and community can have informed conversations about priorities.

The Bottom Line

Lakeville Area Schools is financially stable. The fund balance is growing. Revenue is up.

But growth is slowing. Expenses are rising faster than revenue (5.73% versus 2.84%). Health insurance costs are a real concern. And the district can't do everything people want without asking taxpayers for more money.

The full budget book will be presented at the next board meeting on February 24th for final approval.

For more Lakeville news, check out how the city is finally solving the rail car problem after 14 years of complaints and the new 21,000 square foot indoor soccer facility.