The School District of Lancaster is working to address a nearly $10 million budget deficit after discovering they unknowingly overspent during the 2024-25 school year. District officials presented a multi-year budget strategy to the school board that aims to close the gap through various cost-cutting measures and potential tax increases.
According to district officials, the primary cause of the deficit was a software error that failed to account for 83 employee positions in budget projections, resulting in approximately $8.1 million in unbudgeted salary and benefits expenses.
"The finance team identified an issue with how our accounting software projected salaries and benefits for that year—83 positions were projected to cost the district $0. That's a major reason why our expenses came in over budget," said Adam Aurand, the Director of Strategic Communications for the district, as reported by local news outlet WHP.
Additional factors contributing to the $15.3 million operational deficit included higher-than-budgeted expenses for cyber charter tuition, transportation, and building repairs and maintenance, which collectively exceeded budget by nearly $5 million. The district used reserves from its fund balance to reduce the deficit to $9.6 million.
Superintendent Keith Miles has taken responsibility for the oversight. "As superintendent, I take full responsibility for the oversight of our nearly $290 million budget," Miles said before presenting the district's recovery plan.
The proposed multi-year budget strategy includes several components to address the shortfall, including renegotiating employee healthcare benefits, tightening departmental spending, and potentially reducing staff. The plan also proposes annual tax increases through 2031, with the first increase projected at about 4.7%.
School board member David Perry expressed concern about the accuracy of financial projections. "I'm still a little concerned that these projections might be off relative to where we are at in our current financial position," Perry said during a board meeting.
This isn't the first time the district has faced financial challenges. For the 2025-26 school year, the board approved its highest tax increase (4.25%) since 2008 and cut nine staff positions to cover an expected $21 million deficit according to Lancaster Online.
District financial data shows the challenges extend beyond a single year. While expenses and staffing levels have increased, revenue and student enrollment have declined. Financial advisors estimate district expenses are growing at a rate of 7 to 8 percent annually, while revenue is increasing by roughly one percent.
The school board did not make any immediate decisions on the proposed strategy. An updated plan is expected to be presented in March 2026.