The Crookston School Booard at its Sept. 8 meeting will consider a resolution taking into account the latest budget projection.
Meanwhile, the state is staring down a budget deficit of $5.2 billion, and Superintendent Wayne Gilman said at this morning’s meeting that the board needs to prepare for a couple years of flat K-12 funding from the legislature, and possibly even a decline. That could change if the federal government sends some aid the states' way to try to boost the economy, board member Susan Mills said, but she added that Gov. Tim Pawlenty so far is sounding like he doesn't want any.
In addition to approving the latest budget figures, board member Glenn Olsen suggested that the board revisit its fund balance policy, which was increased a few years ago from 8.3 percent to 10 percent. The 8.3 percent was a common figure in many school districts at one time because it essentially amounted to one month's expenses, but then-Superintendent Ralph Christofferson felt 10 percent would give more of a cushion. The fund balance subsequently grew, Olsen said, and it led to criticism that the district wasn't spending enough, and it was a factor in negotiations with bargaining units. So, he explained, the decision was made to "spend down" some of the balance a couple years ago. Eventually, the economy began its downward spiral.
Although reverting the policy back to 8.3 percent would reduce potential budget cuts next year by $300,000 to $400,000, Gilman said that the district's auditor, Kim Durbin at Drees, Riskey & Vallager, would probably recommend a fund balance equaling three months' worth of expenses.
"Yes, but 8.3 percent saves jobs, it saves some teachers," Olsen said.
Another savings could come in the form of staff development funds no longer being mandated by the state, Gilman said. In previous lean times, the legislature has removed the requirement that 2 percent be set aside for staff development, meaning that districts could lump that money into the general fund.
While he's concerned about the dwindling fund balance, Gilman said the most troubling aspect of the current budget situation is the deficit spending. "This will get us into statutory operating debt," he said.
If the district needs more cash flow to pay the bills, he said it could apply for "Aid Anticipation Certificates," something many districts do, especially those that don't operate under the parameters of a minimum fund balance policy. It involves borrowing money from the state over a one year period, money that's invested and generates interest above and beyond the initial investment. "Just know that as we do our cash flow projections, if it gets too low, and it looks like it will, the board may have to decide on borrowing these funds to pay the bills," Gilman explained. "It could be a million bucks. It's an extra piece we may have to do, and that's the argument for keeping cash on hand."
As the 2009-10 budget comes together in the spring, he said right-sizing the district will be a must. That means not replacing teachers who retire and looking at reductions in staff and programs. It could mean, he said, putting a moratorium on textbook and technology expenses.
"If you have 70 fewer students, you have to staff for 70 fewer students," Gilman said. "We won't put ourselves into more trouble by ignoring it, that would kind of be fiscal suicide."
See Friday's Times for the latest on the district's certified tax levy for 2009 and the lease at the new arena being hammered out by the district and City of Crookston.
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The Crookston School Booard at its Sept. 8 meeting will consider a resolution taking into account the latest budget projection.
Meanwhile, the state is staring down a budget deficit of $5.2 billion, and Superintendent Wayne Gilman said at this morning’s meeting that the board needs to prepare for a couple years of flat K-12 funding from the legislature, and possibly even a decline. That could change if the federal government sends some aid the states' way to try to boost the economy, board member Susan Mills said, but she added that Gov. Tim Pawlenty so far is sounding like he doesn't want any.
In addition to approving the latest budget figures, board member Glenn Olsen suggested that the board revisit its fund balance policy, which was increased a few years ago from 8.3 percent to 10 percent. The 8.3 percent was a common figure in many school districts at one time because it essentially amounted to one month's expenses, but then-Superintendent Ralph Christofferson felt 10 percent would give more of a cushion. The fund balance subsequently grew, Olsen said, and it led to criticism that the district wasn't spending enough, and it was a factor in negotiations with bargaining units. So, he explained, the decision was made to "spend down" some of the balance a couple years ago. Eventually, the economy began its downward spiral.
Although reverting the policy back to 8.3 percent would reduce potential budget cuts next year by $300,000 to $400,000, Gilman said that the district's auditor, Kim Durbin at Drees, Riskey & Vallager, would probably recommend a fund balance equaling three months' worth of expenses.
"Yes, but 8.3 percent saves jobs, it saves some teachers," Olsen said.
Another savings could come in the form of staff development funds no longer being mandated by the state, Gilman said. In previous lean times, the legislature has removed the requirement that 2 percent be set aside for staff development, meaning that districts could lump that money into the general fund.
While he's concerned about the dwindling fund balance, Gilman said the most troubling aspect of the current budget situation is the deficit spending. "This will get us into statutory operating debt," he said.
If the district needs more cash flow to pay the bills, he said it could apply for "Aid Anticipation Certificates," something many districts do, especially those that don't operate under the parameters of a minimum fund balance policy. It involves borrowing money from the state over a one year period, money that's invested and generates interest above and beyond the initial investment. "Just know that as we do our cash flow projections, if it gets too low, and it looks like it will, the board may have to decide on borrowing these funds to pay the bills," Gilman explained. "It could be a million bucks. It's an extra piece we may have to do, and that's the argument for keeping cash on hand."
As the 2009-10 budget comes together in the spring, he said right-sizing the district will be a must. That means not replacing teachers who retire and looking at reductions in staff and programs. It could mean, he said, putting a moratorium on textbook and technology expenses.
"If you have 70 fewer students, you have to staff for 70 fewer students," Gilman said. "We won't put ourselves into more trouble by ignoring it, that would kind of be fiscal suicide."
See Friday's Times for the latest on the district's certified tax levy for 2009 and the lease at the new arena being hammered out by the district and City of Crookston.
