Issued Date
April 10, 2026
Purpose of Budget Review
The objective of the review was to provide an independent evaluation of the adopted budgets for the 2024-25 and 2025-26 fiscal years and the proposed budget for the 2026-27 fiscal year.
Background
Following the South Country Central School District’s (District) October 22, 2025 disclosure that an unplanned deficit occurred during the 2024-25 fiscal year, interested stakeholders requested our Office provide an independent review of the District’s finances. As a result, we began a review of the District’s general fund budgets.
Key Findings
- The District is on track to incur a 2025-26 fiscal year budget deficit of approximately $8.7 million due to inaccurate estimates in the Board of Education (Board)-adopted budget even after accounting for cost-savings measures, including spending freezes and personnel layoffs, recently implemented by the Superintendent and Board.
- The District has no available surplus fund balance to mitigate this budgetary deficit. The District reported an unassigned general fund balance deficit of $1.8 million as of June 30, 2025. Therefore, if current District operating trends continue, based on District-provided information, we project the District will have a fiscal year-end deficit of approximately $10.5 million.
- Despite staffing cuts and spending freezes, District officials indicated the District will need to borrow $6 million to balance the 2026-27 budget. While deficit financing can provide immediate relief, any such borrowing would most likely increase the overall deficit and create future funding gaps due to reliance on debt to pay for operating expenses.
Key Recommendations
- Develop a plan to fund operations and discontinue the practice of relying on one-time revenues to finance recurring expenditures.
- Use trend analysis when developing budget appropriations.
- Closely monitor revenues and expenditures and make budget modifications as necessary in a timely manner to ensure a balanced budget.