The Little Falls School District dropped the assumption it made for planning the 2017-2018 budget, that the district would have a balanced budget.
Total revenue for 2017-2018 is $25.8 million, while expenditures are at just over $26 million.
“At this point expenditures in the general fund exceed revenues by $204,427,” District Business Manager Nancy Henderson said. Dollars in the district’s fund balance will be used to make up the difference.
This projected deficit came when the district made cuts after earlier projections were worse, Henderson said.
As of the end of the 2016-2017 budget, June 30, the district’s general fund had a balance of about $2.5 million.
This could decrease, Henderson said. The district is still doing the math as total expenditures this year were greater than revenue by about $300,000, and didn’t include the invoices the district had yet to receive.
“We could be as high as $500,000 (over budget),” Henderson said.
The Board has to be cognizant of that, Henderson said. Staff has worked to watch the budget in the last part of the year, she said.
The district will have to be careful not to repeat this next year, Henderson said, as it could put the district close to violating its policy of keeping the fund balance at 5-7 percent of the general fund.
Superintendent Stephen Jones said the three areas that led to last year’s budget having a deficit was that the school had seven to 10 fewer students than it budgeted for, and thus lost funding for those students. Utility bills were higher than expected and some unexpected equipment repairs and replacements came up. Finally, some funding for special education had to come out of the general fund.
Under the proposed budget, the district would spend approximately $2.5 million every month, Henderson said.
Keeping a required fund balance of $1.3 to $1.8 million, means the district’s cash flow will be negative and the it will have to borrow money to meet expenditures like payroll and other bills.
The interest on any of those loans is not factored into the budget, Henderson said.
Another issue facing the district during the coming year will be a change in federal funding for special education, which means the district will be paid for services a year after it provides them.
“It’s really hard if you have an increase in special education funding because you don’t get the revenue for it until the year after,” Henderson said.
This funding structure will have a significant impact on districts like Little Falls, Henderson said, because they have a lot of special education students.
Jones said special education expenses in the district are rising rapidly and there is no increase in funding for those programs from either the state or the federal government.
This is leading to districts using more general education funding to cover special education because the state and federal governments keep mandating schools provide these services, Jones said. He argued the federal government wasn’t living up to its promises.
“Let’s go back to the federal Individuals with Disabilities Education Act (IDEA) instituted in 1972. Federal said, ‘We’ll pay 40 percent of your special education.’ They’ve never exceeded 17 percent. They have never lived up to the mandate they set 45 years ago,” Jones said.
Board member Brad Laager said he was concerned cuts to Medicaid could mean cuts to the funding the school receives for special education funding. It is especially concerning if there is a one-year delay between when the district provides the service and the federal government pays them, that cuts could be made, Laager said.
“I don’t want to be caught riding a line and all of a sudden, we’re hammered,” Laager said.
Henderson and Jones said the Medicaid funding only covers the third-party billing the district does, a $200,000 amount, and is paid by the federal government at the time of service.
Jones said the Minnesota Rural Education Association had also sent an email saying it was less concerned about the amount of potential Medicaid cuts than it had been previously.
Both Laager and Board member Cathy Adamek wondered if schools could work together to use a lawsuit to force the federal government to meet its obligations.
“I’m not in any way against special education. But on the other hand, when the state tells us what programming we’ve got to do and we do it and we spend money wisely to try and maintain it, but if you’ve got this whole great nebulous thing and it grows, you don’t know where you’re at,” Laager said.
Jones and Henderson both said they were not the people to talk to in terms of answering whether or not there could be a lawsuit.
Increased special education spending isn’t only an issue for Little Falls, Jones said. Districts in numbers he hasn’t seen in years are approving deficit budgets.
Of the district’s total revenue, 75 percent comes from the state government, 6 percent from the federal government and around 18 percent from local taxpayers.
About 87 percent of what the district spends is in the general fund, including the 77 percent of the total budget spent on paying staff salaries and benefits.
Board member Jay Spillum said there was a time when payroll was as high as 83 percent of the total budget.
Jones said the district is looking at spending approximately $18,000 less than it did last year and the deficit budget is a symptom of issues over funding from the state and federal governments.
A revised budget could be submitted to the Board in October, Jones said. This would deal with ironing out how many students are actually in the district, Jones said.
The budget was approved unanimously.
The budget measure approved by the Board will allow staff to make changes within the budget so long as the total budget amount doesn’t change.
Little Falls School Board Briefs
In other business June 29, the Little Falls School Board:
- Approved hiring Greg Climenski and Tony Bergman as assistant football coaches for the seventh and eighth grade teams, respectively;
- Accepted the resignation of Patricia ZumBerge as high school fall play director and hired Abigail Schnobrich to replace her;
- Accepted the resignation of Cory Schlagel, Little Falls Community High School math teacher and head coach for the boys varsity basketball team;
- Accepted the resignation of girls varsity track team coach, Tara Schlagel;
- Accepted the resignation of Jacob Zierden, Little Falls Community Middle School social studies teacher and seventh grade baseball coach;
- Terminated Janelle LeMieur-Griffith’s employment with the district. LeMieur-Griffith was on leave at the time;
- Approved Policy 730, which sets how the district will deal with students with low balances in their lunch accounts. The policy says unless a family closes the account, no student will be denied a reimbursable meal, which consists of a fruit or vegetable and at least two other components, such as bread, meat or milk. The staff will be able to limit the options for a student with a negative balance;
- Approved Policy 534, which expands the cases in which the district will use a collection agency to collect unpaid meal charges from only doing so if the account is $75 in the hole to including a family who leaves the district with a negative balance; and
- Entered into a closed session to give an evaluation of Supt. Stephen Jones’ performance.
The next meeting of the Little Falls School Board is Monday, July 17, at 5 p.m. in the Board Room at the Morrison County Government Center.