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Revised budget approved; outlook is gloomy Brainerd School Board Staff Writer The state's projected $1.2 billion budget shortfall this biennium and its potential impact on educational funding is one of the chief financial concerns that keep Brainerd School District's Steve Lund up at night.
Lund, director of business services, told the school board Finance Committee Tuesday that any budget cuts from the state would be additional cuts the board would need to make over the next few years.
The committee recommended board approval of the fiscal year 2010 revised budget. Lund said if state lawmakers decide to spread out the deficit based on percentages, and 37.1 percent of the state's 2010-11 budget is spent on K-12 educational funding, then the Brainerd district could see a 9 percent reduction in funding, or $460 per pupil unit. Based on Brainerd's enrollment, this could be a total annual impact to the district's budget of $3.5 million, Lund said.
"Those are the things that keep me up at night and those are the things that are not reflected in here," Lund said of the revised budget. "This is what I would call realistic about what we know right now."
The district's $69 million revised budget was changed to reflect $28,366 in expenditures over revenues, rather than the previously budgeted $412,543 in revenues over expenditures. Lund said this was anticipated since the board hired 20 new teachers to maximize its available federal stimulus dollars, rather than the budgeted 10 new teachers. Also, the district is coming out of deep budget cuts in 2008 and is beginning to stabilize following those cuts.
"We have to remember we went through such significant changes that it made it extremely difficult to figure out how to end the year," said Lund.
The revised budget includes a net increase of $433,605 in revenues and $874,514 in net increases in expenditures. Of those additional expenses, about $600,000 came from additional staff hires. Other changes included $1.6 million in new special education funding and $600,000 in Title I funds, due to federal stimulus dollars, as well as changes after OPEB costs were bonded on the local levy this year. Revenue increases included additional grants received through the Paul Bunyan Educational Cooperative and increases in reimbursements.
The district has incurred a slight decrease in enrollment, resulting in about $115,000 less in general student aid, said Lund. The district also will receive a nearly $200,000 penalty in state appropriations for not settling its contract with teachers by Jan. 15. The district also saw a reduction in third-party reimbursements, said Lund. Other additional expenses included $40,000 for the Forestview and Brainerd High School Mac computer labs, which will mean a budgetary reduction in this category next year. The district also purchased new science textbooks, increasing this fund by $25,000 this year. Lund also said operating costs at Franklin Arts Center also came in higher than anticipated.
The district's Post-Secondary Enrollment Option program expenses have decreased since fewer students are attending college full time during high school, said Lund. Superintendent Steve Razidlo said more students are taking advantage of the College in the Schools program, allowing them to earn college credit through Central Lakes College while remaining at the high school.
Fuel prices also went down. Lund said the district budgeted $30,000 for its fuel escalator and last year spent $24,000. So far this year the district has spent $4,000 in the fuel escalator budget. Lund said heating costs also decreased.
Lund said the four-year projected funding cycle is concerning. The district's federal stimulus funding will end in fiscal year 2012 and its $199 per pupil unit operating levy will expire in fiscal year 2013.
Lund said the district is projected to have a $408,611 budget deficit at the end of fiscal year 2011, a $2.125 million budget deficit in FY2012 and a $4 million budget deficit in FY2013 when the loss of federal stimulus dollars, state stabilization dollars and the expiring levy are factored into the budget forecast. Any cuts in state funding would mean additional cuts. The budget forecast does not reflect any increases in state funding.
"Has EMB seen these numbers yet?," asked board member Reed Campbell, referring to Education Minnesota Brainerd, the district's teachers' union.
Razidlo said this information was shared at Monday's cabinet meeting. Tim Edinger, EMB president, attended that meeting.
The district lost out on nearly $200,000 in state appropriations this year because the board did not reach a 2009-11 contract settlement with EMB by Jan. 15, a penalty that has been factored into the FY2010 budget. The board last week decided to begin the process of mediation with the teachers' union.
The board has not yet reached settlements with any other union groups, except its administrative union, which settled in December for no salary increases for two years. Lund said the revised budget reflects no step and lane increases for teachers and no wage increases for any union groups.
Lund said the district will be going out for bids this spring for a health insurance provider after the district's self-insured insurance fund incurred a 40 percent increase in administrative fees from Blue Cross Blue Shield. He said the district went from an average of $75,000 per month to more than $100,000 per month. As a result the district's insurance pool fund experienced a $446,843 decrease to about $4.5 million. He said the district still has a healthy 5.85 months of expenses in reserve. The district did not increase health insurance premiums this year.
Lund said the district would have had to increase premiums by 8.9 percent to reflect no year-to-date losses and resulting in no draws on the insurance plan pool.
JODIE TWEED may be reached at jodie.tweed@brainerddispatch.com or 855-5858.
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