We always talk about 84 students equalling $1 million in revenue, and that continues to hold true right now.”

Director of Business Services Kris Blackburn

South Washington County Schools entered the 2026-27 school year with enrollment running ahead of budget projections, but district officials cautioned that declining enrollment and rising expenses continue to create long-term financial challenges.
Director of Business Services Kris Blackburn presented a financial update to the School Board during its workshop meeting on Thursday, Aug. 6, reporting a K-12 student count of 18,709 as of July 20. Excluding students participating in Postsecondary Enrollment Options, or PSEO, the district was about 234 students ahead of its budget projection for 2026-27.
Blackburn cautioned that enrollment represents a snapshot in time and typically declines during the school year through attrition and students choosing postsecondary options.
The district continues to project declining enrollment in future years, with kindergarten enrollment of particular concern because of declining birth rates nationally and in Washington County. Enrollment has major financial implications because each student generates about $11,879 in state aid and levy revenue for the district.
“We always talk about 84 students equalling $1 million in revenue, and that continues to hold true right now,” Blackburn said, noting that some of that funding is restricted to particular uses.
Blackburn said state basic formula aid accounts for about 43 percent of the district's general fund revenue, while all state aid accounts for nearly 72 percent. The district's revised 2025-26 budget projected a deficit of just under $1.5 million, while the original 2026-27 budget approved in June projects a deficit of slightly more than $8 million.
Blackburn described the situation as a “perfect storm” of declining enrollment, rising costs and historical state underfunding. The district's unassigned fund balance is also projected to fall below its 16.6 percent policy threshold during 2026-27, triggering steps outlined in district policy to address the situation.
Despite the enrollment numbers coming in above budget, Blackburn said the district does not anticipate changing its current target of $13 million in general fund budget adjustments.
Superintendent Julie Nielsen said the district also want to avoid making significant budget reductions in consecutive years.
“The other thing that we want to be thoughtful about is having to do budget adjustments two years in a row, and you know just what that does to the culture and climate of a district,” Nielsen said. She said making a larger adjustment now could allow the district to focus on its five-year planning, including possible operating and capital levies.
The district will continue monitoring enrollment through the fall, including an important Oct. 1 count. Audit work for 2025-26 is also underway, with results expected to provide a clearer picture of district finances. The School Board is expected to receive budget adjustment recommendations in November and approve district levies in December.
The board also conducted a first reading of proposed changes to seven policies. Updates cover pupil records, student medication and telehealth, overdose medication, interviews of students by outside agencies, student surveys and immunization requirements.
The seventh proposed change is a new responsible-use policy for artificial intelligence recommended by the Minnesota School Boards Association. Nielsen said the policy committee spent about an hour discussing the proposal and that the goal is to have regulations in place as students and staff use AI during the coming school year. The district's technology director is expected to return in October to discuss implementation, and Nielsen said the policy can be revised as needed as the district gains experience with it.