VIRGINIA— For anyone who thought the increase in state aid to education passed by the Minnesota Legislature this spring would resolve school funding shortfalls, ISD 2142 Finance Director Kim Johnson has disappointing news.
The 2023 school district budget that Johnson presented to the district board for approval on Tuesday remains nearly a million dollars in the red and is expected to leave the district’s unassigned fund balance more than $1.7 million in deficit by the end of the coming school year. She said the school board will need to immediately begin evaluating options to address the red ink.
The district expects to end the current school year with a $2.994 million deficit, and with an unassigned fund balance of minus-$417,996, according to budget documents released by Johnson this week.
The district’s financial woes continue despite an education funding bill signed into law by Gov. Tim Walz that increased the state aid per student from $6,683 to $7,138. In addition, more money was allocated to increase the state’s share of special education costs, transportation costs, and school food programs.
But like many districts across the state, ISD 2142 has yet to recover from the enrollment losses suffered as a result of the COVID pandemic. From the 2019-20 school year to 2020-21, ISD 2142’s average daily membership (ADM), the state’s term for adjusted pupil enrollment, dropped by 136 students, with the loss of state aid dollars for each one. Johnson’s ADM projection for next year is 1,928, 88 fewer students than were enrolled in 2019-20. Johnson calculated that the district is missing out on about $635,000 because of the inability to get back to pre-pandemic enrollment levels.
Johnson calculated that the district will receive an additional $1.6 million in state aid for 2023-24, but that the district’s overall revenue increase will be $978,410 as there are offsetting decreases in revenue for long term facilities maintenance, title funds and federal Indian education funding, and several other revenue categories.
On the expenditure side, personnel costs for salary and benefits are going up $910,941, driven largely by increased health insurance costs. Having dropped paraprofessionals to 26 hours per week last year, the district is returning them to 31.5 hours for 2023-24, making them eligible again for health insurance. But the increased hours will offset the expense of substitutes, saving the district some money in that line item. Johnson noted that the personnel figure doesn’t include any increases for contracts that haven’t been negotiated yet. Overall, the district’s projected expenditures, totaling $44,943,731, will be nearly a million dollars lower than the current fiscal year, which ends June 30.
If the district operates according to the plan adopted Tuesday, it will spend about $1.3 million more than it takes in, further reducing the district’s fund balances, possibly putting the district in statutory operating debt, which would require a specific remediation plan.
“We’ve got to get rid of that deficit,” Johnson said.
Johnson recommended a list of steps that district should consider to cut costs, including:
Putting the district’s health insurance out for bid. “Health insurance is out of control,” she said.
Postpone contract negotiations.
Conduct an in-depth review of how the district delivers education to best utilize staff in a cost-conscious manner.
Delay all bus purchases.
Delay all technology purchases.
Take a look at staff development costs and look for alternative funding sources.
Look at using third-party billing for social work services.
Consolidate some bus and van routes.
Change the way the district contracts for post-secondary education options.
Johnson also warned that the new law providing unemployment benefits to non-certified personnel during the summer months could deal an additional hit to the budget. She said she believes the amount set aside by the legislature to cover the costs this year may not be sufficient, forcing the district to directly pay the uncovered portion of the UI benefits. Depending on what future legislative commitments are, the UI requirement could end up costing the district about $1 million, Johnson said.
In other business, the board:
Heard an annual report on the Q-Comp professional development and compensation program.
Approved a memorandum of understanding with the Bois Forte Reservation Early Childhood Program.
Approved a five-year contract with Ed Midwest for information technology consulting services in the amount of $1,177,600.
Discussed propane fuel bids, deciding to award bids to Superior Fuel for South Ridge, North Woods, and Northeast Range schools. Bids from Ferrellgas, which owns the tanks at Tower-Soudan and Cherry, were 66 cents a gallon higher that what Superior Fuel bid for the North Woods contract, and almost 10 cents a gallon higher for Cherry. Board members declined to approve the bids, and district officials will make the necessary contacts to determine how the district could provide its own propane tanks at those locations to promote more competitive pricing.
Awarded the district insurance bid to Dwight Swanstrom Company in the amount of $414,824.
Approved resolutions for membership in the Minnesota State High School League.
Designated Superintendent Reggie Engebritson as the identified official with authority to access the Education identity and Access Management system through the state department of education.
Approved a contract with KY Interpreting Services to provide sign language interpretation services for two students in the district.
Hired the following as teaching staff: Paul Zollinger, science, NER; Sara Debruzzi, Title 1, NER; Amiah Akerson, special education, NER; Nicole Roy, elementary, North Woods; Blake Scofield, elementary, North Woods; Tarryn Bayliss, elementary, NER; Ross Ashburn, social studies, North Woods.
Hired Down Poppema and Michelle Plath as paraprofessionals at Tower-Soudan and North Woods, respectively.
Hired Joel Anderson as head coach for football at North Woods, along with assistants Mark Fabish, Dan Reing, and Matt Koch.
Hired Kandi Olson as head coach for volleyball at North Woods, along with assistants Kaileen Redmond, Becky Lappi, and Ellen Shuster.
Hired Dan Squires and Ellen Pierce as assistant cross-country coaches at North Woods and NER, respectively.
Hired Misty Roseth as head volleyball coach at NER, along with assistant Sena Bissonette.
Hired Cheri Debeltz as head swim coach at NER, along with assistant Sue Pasmick.
Approved the retirement of North Woods nutrition manager Anita King.
Accepted resignations from NER math teacher Ryan Denzer-Johnson; T-S preschool teaching assistant Dawn Poppema; North Woods Check & Connect mentor Austin Oakes; and T-S community ed coordinator Jani Jordan.
Approved the layoff of T-S student and family advocate Muriel Deegan due to discontinuation of the position.