Projected enrollment decrease drives possible budget deficit
The school district may be able to use federal coronavirus relief funds to make up the difference.
Brainerd Public Schools leaders are hoping for a boost in the district’s projected 2021-22 enrollment to help lessen a deficit in the preliminary budget.
School board members approved the preliminary 2021-22 budget Monday, June 28, with an estimated deficit of just over $1 million in the general fund. While there are still some budgetary unknowns that could lessen that deficit, the board asked for Director of Business Services Marci Lord to bring forward a contingency plan in August, laying out what would happen if the deficit persists.
“This is really going backwards from where we want to go,” board member Tom Haglin said of the deficit Monday. “So to go into the next fiscal year with a combined little over a million dollar deficit, it’s just totally going the wrong way. And I can’t sleep well knowing that that's the direction, that’s what we’ve got in front of us.”
The board updated its general fund balance policy in March, stating it would work to increase the fund’s unassigned category — which is essentially the district’s rainy day fund, with money able to be used as needed — to at least 10% of the district’s annual budget. The goal is to reach that 10% in the next five years, but the projected budget deficit puts the unassigned category at only $5.8 million for 2021-22, which is 6.5% of the overall budget, or less then one month of operating expenses.
“We’ve got to figure out a way so that we go into the year with not a deficit but an excess so we can start reaching our goal,” Haglin said.
Along with the general fund, the district’s community service fund also has a projected deficit of $584,503 for 2021-22, much of which Lord said is due to having to cancel so much programming during the pandemic and not collecting any fees. She hopes the district will be able to recoup those losses now that programming has started up again.
The 2021-22 budget already includes $2.6 million in federal coronavirus relief funds, but the district has more available if needed.
The $2.6 million came from the Elementary and Secondary School Emergency Relief Fund of the federal Coronavirus Aid, Relief and Economic Security Act. After three rounds of federal CARES Act dollars, the district still has two different pools of money from that fund, Lord said, one including $5 million that must be used by 2023 and another with $11.1 million to be used by 2024. The district plans to split the $5 million over the next two years but it is not yet sure what all the $11.1 million can be used for.
Lord said she will have to sit down with Superintendent Laine Larson to figure out the contingency plan the board asked for. She will present during the Aug. 9 meeting.
Changes to the budget
Lord highlighted the following changes to the general fund for fiscal year 2022:
A 2.45% increase in general education formula aid.
A projected 10% decrease in federal Title I and Title II funding. Title I funding provides financial assistance to districts with high percentages of students from low-income families, while Title II funding aims to increase academic achievement by improving teacher and principal quality.
A 13.6% decrease in poverty-based state funding.
A projected enrollment decrease of 57 adjusted pupil units, which 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.
The addition of federal coronavirus relief funds.
The removal of county coronavirus relief funds and Blueprint 181 (building project) rebates.
An estimated increase in salary of negotiated labor agreements and related benefits.
A planned net increase in staffing of 10.35 full-time equivalent employees.
A decrease of the unassigned fund balance equal to 6.5% of general fund expenses. The unassigned fund is essentially the district’s rainy day fund, with money to be used in whatever way needed.
The school board will approve a preliminary 2022 property tax levy in September and final levy in December after a public hearing. The budget will then be revised in January and possibly again later in the year to account for any changes.