Rochester, MN (KROC-AM News) - A long-range budget outlook that will be presented to the Rochester School Board Tuesday evening paints a gloomy picture.

The report, which looks ahead to the 2030–2031 school year, predicts large budget shortfalls coming school years due to declining enrollment and other factors. If no action is taken to address the projected deficits, the cumulative total is expected to grow to more than $68 million by the end of the 2031 school year.

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A recent report presented to the school board predicted that the number of students enrolled in the Rochester School District will drop from nearly 17,000 in the coming school year to about 15,600 by 2031. Because most of the state funding received by the school district is based on enrollment, the decline in the number of students is expected to result in a significant hit to the district’s finances—even though the state’s General Education per-pupil formula is projected to increase about 2.5% annually to adjust for inflation.

READ MORE: Rochester School District Faces Significant Enrollment Decline

Legislation approved by state lawmakers this year calls for reducing special education transportation funding by 5% in each of the next two years, and the school district is expecting an overall decline in special education reimbursements later this decade.

Taking into account those factors—as well as increasing expenses for salaries, benefits, and supplies—the report projects a budget shortfall of nearly $13.5 million in the 2026–2027 school year. A shortfall of about $13 million is projected for the following year, with deficits ranging from $11.7 million to $15.8 million in 2029, 2030, and 2031.

With that in mind, Superintendent Kent Pekel is asking the Rochester School Board to adopt a strategic plan for mitigating the impact of reduced funding due to falling enrollment and inflationary increases in expenses. He is recommending pulling $3 million from the school district's reserves each year to lessen the amount of budget reductions needed annually.

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