This practice — known as deficit spending — means we are not building savings for future needs. While occasional deficit spending can be appropriate, it is not sustainable over time.
Steps already taken
As we prepared for the 2025-26 school year, the district implemented several cost-saving measures:
- 10% reduction to department budgets
- 5% reduction to school budgets
- Reduced transfers to athletics and capital projects
- Left 11 vacated district-level positions unfilled
Despite these actions, we are still spending fund balance.
Enrollment and staffing trends
Over the past five years, DSD enrollment has declined by nearly 365 students, including a drop of 160 students from last year alone. During this period, staffing levels did not decrease at the same rate.
State funding challenges
While we had additional funds that were received during and after COVID, those have ceased. Colorado’s school funding structure continues to present challenges, including changes to enrollment averaging and an increasing state budget deficit now exceeding $850 million. While K-12 funding remains a stated priority by Governor Polis, these pressures place current and future funding at risk.
Cost drivers
Salaries and benefits make up 88% of the district budget. Benefits include health and dental insurance, leave, Medicare/FICA, and mandatory CO PERA contributions. All districts (except DPS) must contribute 21.4% of employee wages to CO PERA, and rising costs continue to impact district finances statewide.
Budget Committee recommendations
This year, DSD is spending $1,899,371 from fund balance. To address this, the DSD Budget Committee — made up of staff from across the district — presented Phase I recommendations to the School Board on January 13. These included:
- Modest increases to class sizes in grades 5-12 while maintaining a commitment to small classes
- Reductions to certain centralized positions and reduction of positions tied to needs that no longer exist
- Adjustments to fees and facility rental structures
These recommendations will inform the 2026-27 budget.
Looking ahead
The Budget Committee will reconvene for Phase II, focusing on additional cost reductions to create space for future programs, inflation, and potential salary increases — helping ensure long-term financial stability for DSD.