District presents preliminary FY26–27 budget showing 12.5% drop, flags levy and reserve risks
May 12, 2026 | Custer School District 16-1, School Districts, South Dakota
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A district staff member presented the Custer School District 16-1 preliminary budget for fiscal year 2026–27 and told the board the total proposed budget (excluding CTE building projects) is about a 12.48% decrease from the prior year.
The presenter said the general fund is projected to fall about 13.63% and capital outlay about 14.73%, while special education spending is down roughly 4.18%. "We feel good about this," the staff member said, adding that more than 60% of district spending remains devoted to instruction and program costs.
The report highlighted several revenue and levy items the board will track. The district’s tax-levy request was listed at $6,411,009.86 for FY27; the presenter said legislative changes tied to Senate Bill 245 and House Bill 1051 have altered levy calculations and that the district’s levy rate for payable 2027 is projected at 0.669.
Board members and staff discussed reserve balances and planned transfers. Sarah (business office) said a transfer of $500,000 from capital outlay into the general fund is currently planned; staff also noted carryover and reserve balances that are available but cautioned against ongoing reliance on reserves. Sarah said a recent large tax payment will push the general fund back to a positive balance and enable some transfers.
Why it matters: the district’s preliminary numbers signal smaller budgets across major funds and underscore sensitivity to state funding formula changes and local levy motions. The board was told monthly budget-to-actual reporting will begin immediately during the FY25–26 review to inform decisions before the district’s final budget adoption in September.
What’s next: staff will continue the monthly reporting cycle, present the proposed budget to the finance committee and bring a final budget for board approval in September. The board also noted ongoing external factors — including the gubernatorial contest and related state measures — that could change levy needs and revenue projections.
The presenter said the general fund is projected to fall about 13.63% and capital outlay about 14.73%, while special education spending is down roughly 4.18%. "We feel good about this," the staff member said, adding that more than 60% of district spending remains devoted to instruction and program costs.
The report highlighted several revenue and levy items the board will track. The district’s tax-levy request was listed at $6,411,009.86 for FY27; the presenter said legislative changes tied to Senate Bill 245 and House Bill 1051 have altered levy calculations and that the district’s levy rate for payable 2027 is projected at 0.669.
Board members and staff discussed reserve balances and planned transfers. Sarah (business office) said a transfer of $500,000 from capital outlay into the general fund is currently planned; staff also noted carryover and reserve balances that are available but cautioned against ongoing reliance on reserves. Sarah said a recent large tax payment will push the general fund back to a positive balance and enable some transfers.
Why it matters: the district’s preliminary numbers signal smaller budgets across major funds and underscore sensitivity to state funding formula changes and local levy motions. The board was told monthly budget-to-actual reporting will begin immediately during the FY25–26 review to inform decisions before the district’s final budget adoption in September.
What’s next: staff will continue the monthly reporting cycle, present the proposed budget to the finance committee and bring a final budget for board approval in September. The board also noted ongoing external factors — including the gubernatorial contest and related state measures — that could change levy needs and revenue projections.
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