CITY COUNCIL BUDGET WORKSHOP #2 April 28, 2026 (Hybrid)

CITY COUNCIL BUDGET WORKSHOP #2 (Hybrid) Tuesday, April 28, 2026 at 6:30 PM Council Chambers; Google Meet: https://meet.google.com/ced-mwxj-mro Page A. ROLL CALL B. WORKSHOP DISCUSSION 1) Budget Workshop #2 5 POSITION PAPER OF THE CITY MANAGER The City Council will hold the second of three budget workshops on Tuesday, April 28th. Smaller departments will have approx. five to ten minutes to provide a brief overview to Councilors, with larger departments having up to ten to fifteen minutes to do so. The public will then have a chance to comment and Councilors will then have the opportunity to ask questions and make comments. If there are any items that Councilors wish to add/delete/increase/decrease funding for, those items should be placed in the "parking lot". All parking lot items from the first and second workshops will be discussed at the third/final budget workshop (May 12), where Council will ultimately decide whether to include these items in its budget. For any item requested to be placed in the parking lot, please use the following script:  “I would like to [add/remove/increase/decrease] [$ amount] in funding for [budget item] in the [department name] budget. o [If add or increase]: "I would like the additional funding to come from [raising taxes, cutting another item]." [Specify item to be cut so that can be added to the Parking Lot as well] o [If delete or decrease]: "I would like the savings to be applied to [lowering taxes, funding another item]." [Specify the item to be funded so it can be added to the Parking Lot as well]. Page 1 of 25  o [Optional]: "I would also like the following information about this item: [describe info sought].” Tonight's schedule is below.  City Council (includes special project requests from committees)  SPCTV  Information Technology  Assessing  Water Resource Protection  Code Enforcement  Planning  Economic Development  School*  Finance  Executive  Legal  Other *NOTE: At the April 14 budget workshop, a majority of Councilors indicated they were supportive of forgiving some level of fund balance that the City's share of the budget will need to provide to the School to cover their anticipated budget overage. Although we estimated conservatively for how much we would need to provide the School ($3 million), School officials believe the actual amount will be closer to $1 - $1.5 million. Councilors are being asked by the School Department to specify the amount Council will forgive, as it will have implications for their FY27 budget. Staff continues to recommend no forgiveness as this will lead to either: 1) delaying or not funding various City capital needs since fund balance is our primary source of making capital purchases, or 2) raising property taxes on the City side of the budget to make capital purchases that would have otherwise been purchased with these funds. However, should Council opt to provide forgiveness, we recommend it be for a specific amount instead of a percentage. Any balance over this amount would need to be repaid to the City and any balance under this amount would be retained by the City. Attached please find supporting materials from the School Department. As Councilor West is unable to attend this workshop, she has asked for the following items to be added to the "Parking Lot":  Remove $250,000 in use of fund balance to help buy down the tax rate and shift this amount to the property tax  Add any amount of fund balance in excess of the 12% goal and/or not used by the School to seed a capital building reserve These items, as well as some from staff, have been added to those placed into the Parking Lot at the first workshop and can be seen in the attached screenshot. As Page 2 of 25  you will note, as of now, if all items placed in the Parking Lot are funded/cut, the net impact will be:  $1,281,555 increase in needs from property taxes, resulting in an additional 1.4% increase on the tax rate (from 5.1% to 6.5%)  Adding $215,000 to general fund balance  Reducing Golf Course fund balance by $300,000 City budget materials can be found at: https://www.southportland.gov/369/Municipal-Budget-Documentation School budget materials can be found at: https://www.spsdme.org/page/budget27 Finance Director Ellen Sanborn, Deputy Director Rhonda Glidden, and I will be present throughout the workshop, along with the relevant department and division heads. Parking Lot List 042326.jpg 4.28.26 City Council Agenda Item from SPSD.pdf FY27 Budget 4.28.26 Council Meeting.pdf C. PROPOSED WORKSHOP DISCUSSION 1) Review of Workshop Schedule Below is the remaining workshop schedule for 2026: May 12, 2026 – Workshop  Budget Workshop #3 (Parking Lot) June 11, 2026 – Workshop (Thursday)  DEP/CDC Air Quality Report (tentative)  City Facilities? July 14, 2026 – Workshop  City Facilities? September 8, 2026 – Workshop Page 3 of 25   Metro Review of Various Route Options/Service Enhancements  City Facilities? November 12, 2026 – Workshop (Thursday)  Mayoral Caucus  City Facilities? There are no specific workshop meetings in August (Council summer break), October (City Manager & Asst. Manager away at conference), and December (Council winter break). There are five items on the "Awaiting Dates" list: 1. Future Use of City Hall, Hamlin, & Main Library a. On hold while a decision is made about City facility locations 2. Dog Park a. Staff have retained a consultant and will be working toward a recommendation to bring to Council in the future 3. Discussion About City's Intent for Future Use of Willard Fire Station a. Requested by Willard Hose Co., has overlap with paid parking but ready to be scheduled otherwise 4. Pay As You Throw Follow-Up a. Ready to be scheduled 5. Development of 25 Southeast Rd for Housing a. Can be ready with a month or so notice to staff D. ADJOURNMENT Items may only be introduced after 11:00 p.m. upon a majority vote of Councilors present and voting. Items on a regular meeting agenda not introduced pursuant to this rule shall be placed on the next regular meeting agenda. Page 4 of 25 Page 5 of 25  South Portland School Department Office of the Superintendent 120 Wescott Road, South Portland, ME 04106 207-871-0555 Presentation to City Council 4.28.26 The South Portland School Department is seeking consideration and clarity on a one-time grant from the city to resolve FY26 projected deficit. This is projected not to exceed 2 million dollars. Across the Cost Centers anticipated ending balances FY26 Budget Anticipated EOY Cost Center 1 Regular Instruction 28,543,963 -650,000 Cost Center 2 Special Education 15,048,861 185,000 Cost Center 3 Career-Technical Education 0 0 Cost Center 4 Other Instruction 1,262,741 25,000 Cost Center 5 Student and Staff Support 5,071,927 380,000 Cost Center 6 System Administration 2,771,251 -187,788 Cost Center 7 School Administration 3,198,248 -52,093 Cost Center 8 Transportation 2,830,679 -620,000 Cost Center 9 Facilities 6,233,469 -331,598 Cost Center 10 Debt and Other Commitments 7,968,417 8,998 Cost Center 11 All Other Expenditures 202,000 -700,000 TOTAL 73,131,556 -1,942,481 Over for Category Projections Page 6 of 25 Surplus Revenue Revenue - Energy Credit $906,388 Revenue - Rentals, Insurance Proceeds, MaineCare $240,690 $1,147,078 FY25 Food Service Debt $408,355 FY26 Food Service Projected Debt $767,000 Revenue - FY26 Insufficient Fund Balance $110,309 Revenue - Insufficient funds from Reserve $160,000 Revenue - Lower than Anticipate EPS State Aid $93,139 Revenue - TIF Lower than anticipated $67,190 Revenue - Lower Gate and CINC $128,566 Personnel - new contract provisions, unknown Supt transition, withholding reconciliation $700,000 Substitute Under Budgeting $75,000 Transportation and Facilities Under budgeting (including electricity) $500,000 Potential for changes in utilities and gas costs $80,000 Total Overage Potential $3,089,559 Potential Deficit $1,942,481 Understanding the ending financial position of the School District for FY26 is critical to making the best decisions for FY27 and a path towards financial sustainability. Your consideration is appreciated, such that we can present the most up-to-date information to the School Board for their deliberations. Sincerely, Dr. George Entwistle, Superintendent Dr. Johanna Prince, Assistant Superintendent Ms. Abigail Ketchen, Director of Finance Submitted 4.21.26 Page 7 of 25 Meeting with City Council 4.28.26 Page 8 of 25 1  FY27 Proposed Budget Consideration The school board is working to build fund balance and financial stability. ● 4/13/26 - SPSD Board Action Item to Seek 1% additional guidance from Council for FY27 Contingency ● 4/14/26 - Council Workshop indicating support for 1% and recognition of FY26 deficit ● 4/28/26 - Council Meeting - Clarity on FY26 deficit value to inform SPSD School Board deliberations on final FY27 Budget proposal ● 4/29/26 - SPSD Board Meeting to finalize budget Page 9 of 25 2  Agenda ● FY26 Budget Analysis ○ Projections ○ Cost Drivers ● Request from City Council on FY26 debt provisions Page 10 of 25 3 Budget Update Page 11 of 25 4  SPSD Fund Balance -Overage/+Surplus/ Starting Balance Planned Use Ending Balance or Adjustments FY21 $3,312,878 -$500,000 $2,117,345 $4,930,223 FY22 $4,930,223 $0 $988,617 $5,918,840 FY23 $5,918,840 -$1,500,000 $544,868 $4,963,708 FY24 $5,375,504 -$1,600,000 -$872,201 $2,903,303 FY25 $2,903,303 -$1,050,000 -$1,113,612 $739,691 FY26 $739,691 -$850,000 *** *** Page 12 of 25 Building Financial Stability - Fund Balance Page 13 of 25 6  SPSD Fund Balance ● Fund Balance in Maine Schools is capped at 9% before restrictions set in (Statute Reference) ● This would mean a potential 6.6 million dollars in undesignated fund balance ● We must explore all avenues to return to stability Page 14 of 25 7 FY26 Budget Forecast Page 15 of 25 8 FY26 Budget Forecast Page 16 of 25 9  Reasons for FY26 Projected Deficit ● Nutrition deficit, after depleting its savings in FY25 ● Union agreements ○ finalized after the budget process was completed ○ lacked finance support on calculating impact of decisions ● Repairs/additional facility spending ● General under-budgeting Current spending freeze and pause on non-student facing roles is having a positive impact. Page 17 of 10 25  FY27 Proposed Budget Tax Impact - 6% FY26 Budget FY27 Budget Percent Change Municipal $ 4.67 $ 4.81 3.0% School $ 8.35 $ 8.85 6.0% County $ 0.53 $ 0.57 7.1% Metro $ 0.10 $ 0.11 8.1% Total $ 13.65 $ 14.34 5.1% $514,000 Average South Portland Home Value $257 FY27 Annual Increase for School Portion $354 Overall Increase Page 18 of 11 25  FY27 Proposed Budget Tax Impact - 7% FY26 Budget FY27 Budget Percent Change Municipal $ 4.67 $ 4.81 3.0% School $ 8.35 $ 8.93 6.95% County $ 0.53 $ 0.57 7.1% Metro $ 0.10 $ 0.11 8.1% Total $ 13.65 $ 14.42 5.64% $514,000 Average South Portland Home Value $299 FY27 Annual Increase for School Portion $396 Overall increase Page 19 of 12 25  FY27 Comparison 6% 7% FY26 Budget FY27 Budget FY27 Budget School $8.35 $8.85 $8.93 Total $13.65 $14.34 $14.42 $514,000 Home School Portion of Taxes $4,291.90 $4,548.90 $4,590.02 Increase from FY26 $257.00 $298.12 Total Taxes $7,016.10 $7,370.76 $7,411.88 Increase Total $354.66 $395.78 Page 20 of 13 25  City Council Consideration Would City Council consider a one time grant to the School District to resolve FY26 projected deficit. This is projected not to exceed 2 million dollars. Page 21 of 14 25  School District District will ● Work to provide needed finalized documentation for city audit regarding this transfer ● Work with School Board on fiscal policy implementation ● Implement local controls and ongoing reporting to be transparent in spending and monitoring ● Present to Council at least three times in FY 27 on budget monitoring Page 22 of 15 25  FY27 Proposed Budget Consideration The school board is working to build fund balance and financial stability. ● 4/13/26 - SPSD Board Action Item to Seek 1% additional guidance from Council for FY27 Contingency ● 4/14/26 - Council Workshop indicating support for 1% and recognition of FY26 deficit ● 4/28/26 - Council Meeting - Clarity on FY26 deficit value to inform SPSD School Board deliberations on final FY27 Budget proposal ● 4/29/26 - SPSD Board Meeting to finalize budget Page 23 of 16 25  History of School Budget Support South Portland, Maine — School Budget Validation Referendum Results Year Election Date Registered Voters Ballots Cast Yes Votes No Votes Passed? (Yes %) 2016 June 14, 2016 19,170 1,318 861 446 65.9% 2017 June 13, 2017 2018 June 12, 2018 2019 June 11, 2019 Data Collection in Progress 2020 July 14, 2020* 2021 June 8, 2021 2022 June 14, 2022 2023 June 13, 2023 871 598 273 68.7% 2024 June 11, 2024 22,556 1506 990 506 66.2% 2025 June 10, 2025 20,225 2,545 1,555 987 61.2% Page 24 of 17 25 Questions 4.28.26 Page 25 of 18 25