BRAINERD — After revising the district’s budget for this school year, an even larger deficit than projected plagues Brainerd Public Schools.
Decreased enrollment and higher staff costs contribute to the low funds, while coronavirus relief funds will help for now. Come 2024, though, those funds will run out, and the district might need to make big financial decisions if something doesn’t change.
School Board members approved the preliminary budget for fiscal year 2022 (the 2021-22 school year) last June and looked at revised numbers Monday, Jan. 24, that show a deficit of just over $2 million, nearly double what the preliminary budget showed.
As the year progresses, revenue and expenses initially projected for the preliminary budget can be revised with updated figures. The first revision of the district’s budget concentrates on the two largest variables — revenue from students and expenses from staff, Director of Finances Marci Lord told the board.
The district added teachers and other staff positions with the use of COVID-19 relief funds in response to COVID-19, raising salaries and benefits expenses by $637,010.
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Enrollment numbers are updated based on two factors — actual, known year-end enrollment for the 2020-21 school year and actual, known student counts for the beginning of the 2021-22 school year, as of Oct. 1. With this information, enrollment can be more accurately projected for year-end 2021-22 and compared against the projected number used in the preliminary budget.
The district had an enrollment of 6,168 adjusted pupil units at the end of the 2020-21 school year, which is a decrease of 3.9% from the beginning of that year. Adjusted pupil units are calculated based on student attendance and weighted based on grade level. Students in seventh through 12th grades are weighted as 1.2, while younger students are weighted as 1.
This year, the district started the year with 6,306 adjusted pupil units and now projects to end the year with 6,075, which is a decrease of 93 students over the previous year, compared to the projected decrease of 57 in the preliminary budget. The district’s projection model uses data from the past six school years.
Unassigned funds
The district’s unassigned fund balance, which is essentially a rainy day fund that can be used however needed, had about $10.8 million at the end of fiscal year 2021. That number amounted to about 12.6% of the district’s total general fund expenses and exceeded the board’s goal set last March of having at least 10% of operating expenses in the fund at all times.
As of the latest revised budget for fiscal year 2022, the unassigned fund sits at $8.9 million after experiencing a deficit of nearly $1.9 million this year. The new total represents about 9.69% of the budget, lower than the board’s new goal, though the board did not intend to reach that goal for three years.
Aside from enrollment and staffing, other changes to the budget since June 2021 include:
- Updated federal and state awards, including COVID-19 relief funds,
- Decreased medical assistance billing and special education revenue,
- Updated expenses with settled labor agreements and staff changes,
- Increased revenue and expenses from bonds issues in 2021, and
- Increases to miscellaneous revenues, including interest, donations, fees, etc.
Though admittedly shocked at the numbers in the revised budget, Superintendent Laine Larson reminded the board coronavirus relief funds will help cover some of the gap, as was intended.
Those funds expire in 2024, however, after which board member Kevin Boyles said the board will have a “date with destiny.”
“In 2024, this board will have some difficult decisions to make, whether that’s an operating referendum, whether that’s substantial staffing cuts or a reduction in services or a combination of all those things — it’s coming,” Boyles said. “So anything we can do in the meantime to insulate that is great, but, again, (Lord) is running out of creative ways to reassign those dollars, and we’re going to have to roll up our sleeves at some point.”
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On the upside, Boyles said this situation will force administrators and board members into creating budgets that are functional in a post-COVID-19 world and don’t rely on relief funds.
The hope going forward, he added, is that the pandemic will subside and the district will regain some of its lost enrollment, which Larson said is already happening. Enrollment typically begins to decrease at this point in the year, Larson said, but instead the district is seeing small increases each week, which is a sign of hope.
“I know hope isn’t a business strategy,” Boyles said, “but I think that’s a realistic expectation.”
THERESA BOURKE may be reached at theresa.bourke@brainerddispatch.com or 218-855-5860. Follow her on Twitter at www.twitter.com/DispatchTheresa .
