REGIONAL— The St. Louis County Schools, ISD 2142, may enlist the services of a well-known lobbying firm to try to woo concessions from the Minnesota Legislature to address funding concerns unique to the district, per discussion at the school board’s Feb. 14 working session.
The challenge of funding was made clear by district finance director Kim Johnson toward the end of the board’s review of the 2021-22 annual audit report presented by Greg Knutson of Walker, Giroux & Hahne, LLC, the district’s long-time auditor.
Bob Larson asked a question sparked by Knutson’s comment that the district had $1.6 million of expenses over revenues for the year.
“I should know the answer, but our general fund, are we OK?” Larson asked.
“No,” Johnson replied. “That’s why we’re working on it. It can’t be dropping that much.”
Johnson said that the district is still trying to cope with the loss of students and associated funding from the COVID pandemic.
“We lost 130 to 160 students and we haven’t recuperated from that,” Johnson said. “We’re still down 80 students, and 80 times $10,000 is $800,000, so guess what, we’ve got a problem. You know what’s happening with costs, fuel costs have gone up, food costs have gone up, everything has gone up. Health care costs have gone up. Everything is increasing and our revenue in the general fund is not.”
That’s where lobbying the Legislature at a time when they have a massive $17.6 billion budget surplus becomes important. Board members reviewed a proposed contract with The Costin Group for them to advocate for three specific changes that would improve the district’s bottom line.
One would be for an increase in the amount of reimbursement aid the district receives for unfunded transportation costs.
“Transportation is paid largely on the number of students in your district,” Johnson explained. “That doesn’t work for us. We have to travel a long way to bring our kids into the schools because we have such a large area. They are only paying 18.2 percent of the unfunded portion of our transportation costs.”
The Costin Group would lobby on the district’s behalf for passage of a bill currently in the House that would raise that rate to 70 percent.
“That would help the district significantly because right now we have to fund a lot of our transportation with general fund dollars that should be going for education. That’s a huge, huge piece.”
Another unique concern is getting funding for wastewater treatment and water systems repairs and modifications at North Woods and South Ridge.
“We aren’t hooked up to city sewer and water like a lot of the other school districts, so actually we’re a rarity,” Johnson said. “We get long-term facilities maintenance money for projects greater than $100,000 that fall in the categories of asbestos, indoor air quality, and fire safety. We’re allowed to levy for those projects on a pay-as-you-go basis and pay for those out of our long-term facilities maintenance money. I would like to have them add sewer and water upgrades, and that would help the district to be able to pay for those upgrade projects.”
Johnson said another option being considered is to get the projects included in the bonding bill the Legislature will consider later in the session.
The third item The Costin Group would help with involves two certificates of participation, a funding mechanism similar to bonds, totaling $7 million, used to fund additions at Cherry and South Ridge.
“In order for the district to pay for new additions and new space we have to use this kind of funding,” Johnson said. “It’s paid for just like bonds and we pay principal and interest on them.”
ISD 2142 has permission from the Department of Education to levy for those costs for five years, but it’s only a five-year extension.
“We want to extend that,” Johnson said. “We need this. We need all of them.”
Board member Chris Koivisto questioned whether the district’s concerns would get the attention they need given the number of clients The Costin Group has to represent.
“Right now if they’re going during the prime time of legislative action, they’re probably contracting for lots of other things,” he said. “I get nervous about them being overextended and actually doing the work. I can’t go without sharing that concern.”
The board discussed the possibility of asking for reports from The Costin Group to demonstrate accountability for their activities and time under the contract. The board will act on the contract proposal at its business meeting on Feb. 28.

Audit results
Knutson’s audit of the district resulted in an unmodified opinion, and Koivisto asked him to explain the significance of that.
“Is that rare or common?” he asked. “How do we compare? Do we have bragging rights or no?”
“You’ve got bragging rights,” Knutson responded. “Not everybody has that. As far as the number of findings, you’re second to none as far as the government entities we audit.”
The district did have a familiar and longstanding finding related to its cash handling procedures at its schools. The district doesn’t have enough staff in each office to provide for the recommended separation of duties when it comes to handling such transactions. As in the past, the district acknowledged the finding and will continue with the corrective action plan of having the district’s accountant monitor those transactions.
Knutson also discovered four minor items that he recommended the district address. One was to reconcile old outstanding wire transfers, some dating to 2016, still listed as outstanding that had been manually entered into the records. Two items dealt with following petty cash procedures at Cherry and Northeast Range. The fourth was a recommendation to close six checking accounts at Ely Area Credit Union that were opened with the district’s tax ID number for use by booster groups. Those accounts were not approved by the board or the administration, Knutson said.