The Douglas County School District approved a $957 million budget Tuesday that district leaders said boosts employee compensation and maintains school funding stability despite declining enrollment and limited increases in state funding.

The 2026-27 budget increases expenditures and transfers by nearly $2 million compared with the district’s revised budget for the current fiscal year. Still, officials project a $22 million shortfall by the 2027-28 school year, driven in part by a statewide budget gap estimated at more than $1.2 billion.

District officials said the current budget gap will be partially covered through a one-time drawdown of the district’s general fund, reducing reserves to pre-pandemic levels. Leaders warned the strategy is temporary and could require more significant cuts next year.

“Without a structural change to how we fund schools in this state, there is at least a substantial risk that next year’s budget would not just be lower, but substantially so,” board member Brad Geiger said at a previous meeting. “Any substantial decrease in our budget means decreasing employees.”

The budget includes more than $15 million for employee salary and benefit increases. Licensed teachers and staff will receive step increases averaging between 2% and 2.5%, while nonlicensed employees will receive a flat 2% raise.

“The largest budget priority for 2026-2027 was to continue to invest in DCSD employees with the goal to be able to recruit, retain, develop and reward the best employees for students,” the budget executive summary states.

District officials said DCSD also will absorb about $5 million in rising employee health insurance costs.

Under Colorado’s 2026 School Finance Act, Douglas County’s per-pupil revenue will increase by $338 to $11,555 per student. However, district officials said enrollment is projected to decline by 1,172 students, limiting the net increase in total program funding to about $7 million year over year.

Enrollment has declined for seven consecutive years, officials said, with further decreases expected.

To balance the budget while maintaining current investments, the district plans to use $22.6 million from its reserves. Officials said strong fund balances will allow the district to continue compensation increases and student support spending without immediate cuts.

Rising costs for transportation, facilities and employee benefits are expected to continue straining the district budget, officials said. However, some increased spending is being offset by roughly $20 million in savings during the current fiscal year, including from unfilled staff positions and consolidated roles.

Board members also received an update on the district’s voter-approved 2024 bond program. Douglas County voters approved a $490 million bond measure in November 2024 to fund capital projects over four years.

Major bond projects include $173.5 million for capital renewal and replacement work and $150 million for new construction. The package also includes $38.2 million for career and technical education projects, $20 million each for growth and decline projects and information technology upgrades, $15.4 million for special education improvements and $10 million for safety and security upgrades.