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98 EXECUTIVE SUMMARY Page 14 programmatic changes are considered. The following section will detail the major drivers of the continuation cost estimates to include salaries and wages,required matching benefit changes, and inflationary adjustment for non-salary items, and the net effects of the estimated State reductions contained in the budget. Salaries and Wages $1,837,274 The State of North Carolina has not yet provided a biennial budget for fiscal years 2026-27. In the absence of an adopted budget,the District has estimated a 4% salary increase for all staff. These projected increases amount to $1,294,864 for base salaries and $542,410 for the matching local supplement, for a total of$1,837,274. Final adjustments may be necessary once budget details are provided by the General Assembly. Benefit Increases $11115,633 Federal and State legislation determines employer-required matching rates and annual health insurance premiums for employees. These changes necessitate adjustments to our local operational plan, as the District is responsible for covering benefit increases for the local portion of teacher salaries and all locally-paid employees. The Federal Insurance Contributions Act(FICA) rate is expected to remain at 7.65%. However, to account for mandated increases in salaries and corresponding supplements, an additional $147,783 is required for FICA matching. Continuation costs also include adjustments for the Teachers and State Employees Retirement System(TSERS) matching rate, projected to increase from 24.67%to 25.15%, and Employer- Sponsored Health Insurance premiums, which are expected to rise from$8,500 to $8,812 per employee. These rate changes result in continuation needs of$731,335 for TSERS matching and $236,515 for Employer Health Insurance premiums. In total, the combined continuation costs for FICA, TSERS matching, and Employer Health Insurance premiums amount to $1,115,633. Other Non-Salaried Operating Costs $723,483 To address the rising costs of goods and services necessary for District operations, a 4% inflationary adjustment has been applied to non-salary operating costs. These costs encompass a wide range of expenditures essential to maintaining daily operations, such as utilities, transportation, instructional materials, technology infrastructure, facility maintenance, and contracted services. Continuation Costs Summary Continuation Item Cost Base Salaries $ 1,294,864 Local Supplements 542,410 Social Security(FICA) 147,783 State Retirement Matching 731,335 Employer Paid Health Insurance Premiums 236,515 Non-salary Operating Costs 723,483 Total Budgeted Continuation Costs $ 3,676,390 Chapel Hill—Carrboro City Schools—FY 2026-27 Board of Education's Budget Request