Shakopee Schools Project $7-9 Million Deficit by 2026-27 School Year
By Andy Buckner
Less than 24 hours before students would be finishing classes for the 2024-25 school year, Shakopee Public Schools took another step in addressing the future projected budget shortfall of $7-9 million for the 2026-27 school year.
The Shakopee Public Schools’ Board held a special meeting the evening of Wednesday, June 4. Despite the impact of the issue at hand, the meeting was sparsely attended. The in-person audience consisted of six individuals in the auditorium of Thrust Stage at Shakopee High School when the meeting was called to order at 6 p.m.
Addressing the board and attendees were Superintendent Mike Redmond, Ed.D., and the district’s Director of Finance and Operations, Bill Menozzi. While the district’s budget will remain balanced for the 2025-26 school year, the budget is projected to become greatly unbalanced starting in fiscal year 2027, which covers the 2026-27 school year. According to Redmond, when it comes to the district’s budget from that point on, “The early projections in regards to state funding are not very optimistic.”
Redmond and Menozzi pointed to two factors that are the strongest contributors to this upcoming shortfall. For one, increases in state funding for public school districts have not kept up with inflation. To paint a more vivid picture of this issue, Redmond specifically pointed back to the year 2021, when nationwide inflation rates jumped from 2.6% to 4.2% in the month of April. Such a drastic increase was not even close to being met with a proportional increase in school funds, as the state funding allotted to Shakopee Public Schools only increased by 0.6% the following fiscal year. Had funding remained consistent with inflation, Redmond states that had state aid kept pace with the rate of inflation over the past four years, the district would be receiving an additional $795 per pupil enrolled in the district, or $6.6 million in revenue each year.
The chief contributor, however, is an issue far beyond the control of local or state government. Birth rates are decreasing in the area, leading to fewer pupils enrolling in the school district, which negatively impacts how much funding is made available to the district by the state and federal government while various operational costs remain static.
“This is not just a Shakopee issue,” Redmond said.
He is correct both in terms of the national birth rates decreasing and in terms of school districts all across the state dealing with major budget deficits. The 11 districts that Shakopee Public Schools consider to be comparable to their own are facing average cuts of nearly $9 million from their respective budgets for the 2026-27 school year. Meanwhile, more urban districts are suffering huge budgetary hits, with Robbinsdale Area Schools recently announcing over 200 staff cuts, and Minneapolis Public Schools currently estimating a mountainous $75 million budget deficit for the upcoming school year. All told, estimations of budget deficits shared across all public school districts in Minnesota range from a collective $250-300 million.
The most recent state education bill was passed in 2023. While this bill allotted a record $2.3 billion across the state’s districts, there have been concerns that the state legislature was too stringent with the mandates that were enforced on school districts in conjunction with the funding.
Asked about the bill’s impact on this current budget crisis, Redmond said, “That’s a really complicated question. If we take the mandates away, there were increases in the special education cross-subsidy, there were things of great value to school districts, but also there were some increases in cost.”
The district’s leader stated that the mandates were not a primary factor in the shortfall and their impact paled in comparison to the per-pupil funding issues.
With Minnesota’s legislative bodies still in session, an official funding outlook for the near future is yet to be given, but the state is currently projected to only increase funding for Shakopee Public Schools by $782,000 over the next four years. That could increase if the district finally begins to receive “QComp” funding from the state, which aims to help districts create higher quality professional development opportunities. Shakopee Public Schools has spent years on a waitlist to receive that funding despite attempts from local representatives and the Minnesota School Boards Association to expand the funding to include all districts that have applied for this form of state aid.
Regarding the minimal projected funding increases, Menozzi said, “On a school district budget of over a hundred million dollars, that is just not sustainable.”
To address the issues facing their own district, Shakopee Public Schools has already begun taking some initial steps. They have enlisted the help of Schooley Mitchell, a consulting firm that helps school districts identify cost-saving opportunities. Because of the firm’s compensation structure, Redmond considers this partnership a “no-risk approach” for the district. The district has also found a new safety training service that will save them $16,000 and, according to Redmond, will meet the quality of the safety training service the district currently uses. Another option the district is considering is reducing the amount of buses utilized for student transportation, which Redmond states is possible to do without increasing the walking distances of students or services provided to eligible students.
Redmond also announced that the district will not be filling positions for the upcoming school year that are deemed likely to be cut in the 2026-27 school year. These positions primarily consist of educational support roles that, while having a largely positive impact on a student’s education, are generally not considered essential to the functioning of a school when it is being so intensely scrutinized. These roles would have been to support district-wide professional development.
“They’re positions that we know provide value, but when we look at $7-9 million in cuts being projected, those positions are likely to be cut,” Redmond said.
When difficult cuts such as these need to be made, it is nearly impossible for the individuals who serve in a school district to avoid being negatively impacted since it’s a service-based organization. In Shakopee, 87 cents per dollar gets spent on compensation for staff, the majority of which are of course teachers and those positions closest to students. It is a grim reality for Redmond and the school board, who have to deal with the difficult side of education administration and governance on a regular basis.
“It’s very difficult to [balance a budget] without impacting people”, Menozzi said at the meeting.
No matter how much money the district is able to save, the school board is currently examining the possibility of making $3 million in permanent expenditures reductions for the 2026-27 school year. To try and provide some semblance of stability to the budget situation, Redmond and Menozzi also laid out a few additional options that are being considered by the school board. However, Redmond made it a point to say that “everything is on the table” when it comes to the solutions the district will consider.
Formally presented in April 2025 and continued as the topic of discussion at the special meeting were two potential operating levy options that, if approved by the school board, could be placed on an electoral ballot this coming November.
Question one of a potential tax-neutral levy would generate $5.0 million in new annual revenue. A $5.16 million tax decrease for Shakopee Public Schools taxpayers occurs in calendar year 2026 due to some construction debt being paid in full. The result of both actions would shift community taxes from construction debt in 2025 to operating expenses in 2026 (‘tax-neutral’).
The school district is also considering a possible second question that would move the district’s operating levy to the state cap and would generate additional per pupil revenue totalling $2.3 million per year. The second question, if approved, would increase the current property taxes on a $400,000 house by approximately $97 per year.
Redmond suggested that these levy options are “the only real path” to generating revenue that would allow the district to simply operate at the same level it does now.
Knowing they are not alone in facing issues like this, Redmond assured that he and others within the district have been looking at the examples of other districts who have had to face similar projections in the past. Redmond himself recalled experiences he had to endure as a principal before becoming a superintendent.
“In one district I worked at as a principal, we made significant budget cuts for an extended period of time,” the superintendent recalled. “It was really, really unpleasant work, but in an odd way it was really important training. Nobody goes into education to do that work, but unfortunately when state funding doesn’t keep pace with inflation, we’re forced to make those tough choices.”
The tough choices are beginning to be made right now, as the community must consider whether or not to support a vote on the tax levy options. The only public comments made at the meeting were from a community member who wanted to thank the district leadership for their transparency in addressing this issue and keeping the community informed. Such transparency could serve as an example for districts across the state, as Shakopee is not alone in what is beginning to be classified as a statewide crisis in the field of public education.