A tough budget year in FY 27
You may have seen media coverage of Richmond Public School’s (RPS) recent budget announcements. This past Thursday Jan 22nd, RPS staff presented a draft budget to the School Board and sadly next year will be a difficult budget year. RPS is expecting only modest increases in revenue from the City and State while operational costs of running schools continue to rise. As a result, RPS staff are proposing about $22 million in reductions to maintain a balanced budget in FY 27 – which will run from July 1, 2026 through June 30, 2027.
As the School Board prepares its budget for submission to the Mayor’s office, below are my guiding principles:
Protecting front line staff in schools
Minimizing impact on academic priorities
If we make staff reductions, to keep these reductions inside central office
A brief summary of proposed budget reductions for FY 27:
Pause all raises for one year (but maintain the annual 1.17% step increase)
Reduce 46 FTEs from the Central Office
Share half of the annual increase in health insurance costs with employees
Close the Richmond Virtual Academy, which was created in response to the pandemic and initially funded with COVID relief dollars
Cut summer school for K-8 students
Reduce by 30% our mental health and wraparound support contracts
Furlough all senior staff (directors and above) for 2 days
Furlough the Superintendent for 5 days
Why are we expecting reduced revenues at City Hall?
In an effort to better align the property tax assessment process with the budgeting process, the City will be freezing property tax assessments for FY 27. This means, for example, if the City assessed your house at $250,000 this year, it will remain assessed at $250,000 next year, regardless of increases in market value.
RPS funding from the City is closely tied to property tax revenue, as this is the largest source of discretionary income for Richmond. Next year, because of the assessment freeze, the only increase in property tax revenue will come from new construction. This means that the increase in property tax revenue next year will be quite small. As a result, RPS staff is expecting a very modest increase in City funding.
Why are RPS costs rising?
RPS costs continue to go up – for salaries, health insurance, transportation, and all sorts of contracts. Some of these cost increases, such as the roughly $17 million in raises and step increases, are things I have STRONGLY advocated for. Below are more details of what RPS costs have been rising:
FY27 Budget Pressures
Priority 1: Academics (Example: Higher Cost of Exceptional Education Services) - $5,358,863
Priority 2: Talent (Example: Raises, Step increases, health insurance costs increase) - $17,371,305
Priority 3: Wellness (Example: Higher Cost of Nursing Services) - $112,000
Priority 4: Engagement (Example: Higher Cost of Attendance Initiatives) - $139,800
Priority 5: Operations (Example: Higher Cost of Transportation and Fuel) - $2,890,055
Other (Example: Expiration of Special Revenue Funds) - $5,397,651
TOTAL Amount - $31,269,674
Conclusion:
Expenses will continue to rise given collective bargaining, inflation, and the expiration of special revenue funds that supplemented our operating budget. We are expecting an increase of $31 million in expenses.
Revenue increases will be much smaller than in past years due to the City’s property tax freeze and the State’s Medicaid hole. We are expecting an increase of roughly $9 million in revenue.
The gap between our $31 million in increased costs and only $9 million in additional revenue is why we are proposing about $22 million in budget reductions for FY 27. We are making every effort to limit the impact on schools by implementing furlough days for senior staff including the Superintendent, downsizing the central office, holding off on pay increases across the division, closing the Richmond Virtual Academy, and eliminating summer school for K-8 students.
What happens next?
The School Board will host a town hall meeting on Feb. 9 at River City Middle School where the public can discuss the budget and provide feedback. RPS will send the proposed budget to the Mayor’s office where it will be incorporated into the City Budget and the ultimate funding decision is up to City Council. Once RPS gets a final appropriated number from City Council in the spring, the School Board will make final modifications and pass an FY 27 budget in May 2026.