School budget adjustments anticipated

by David Hill
Editor
 
The Board of Education for School District 564, Thief River Falls, established a budget adjustment minimum target of $500,000 at its meeting Monday, Jan. 23. The budget adjustment is necessary in view of the District deficit spending for the past three years.
Monday, Tanya Monson-Ek, the district’s business manager, presented an overview of the condition of the district, and guiding documents that could be used to help the district reach its objective. 
The deficit spending began in the 2014-2015 school year and increased to $1.2 million for this school year. This was possible because the District had built up an unassigned fund balance. (The district’s goal is to maintain an unassigned fund balance between 10 and 25 percent.) Four years ago, the unassigned fund balance was at record levels, and this allowed the District to add programs and teachers. 
At the conclusion of this school year, the unassigned fund balance is expected to be at 14 percent, and if the trends and projections continue with no adjustments being made, the unassigned fund balance would be at 7 percent next year, which is unacceptable.
Key factors impacting the budget this coming year, in particular is the fact that the graduating class of 2017 will be the largest the district has seen in many years (190), and next year’s kindergarten class one of the smallest. Thief River Falls receives $6,067 per pupil unit in aid. It is anticipated that the Legislature could approve a 1 percent increase in the formula, but that would amount to $130,000 and it cannot be relied upon. In any event, a loss of 42 students would amount to a loss in aid of $253,814. 
The District continues to hold out hope that recent improvements in the housing market will bring more students to the District, but knows that it must deal with this reality now.
Costs for the district also continue to climb. Contracts for teachers, principals and individuals will expire June 30, 2017, and required Teacher Retirement Account contributions are expected to increase by 1 percent for each year for the employer over the next two years.
At the outset of the discussion Monday night, the District established it will not make decisions to meet those budget reduction goals by violating federal, state or local rules and regulations, or collective bargaining agreements. They have also decided not to deficit spend more than the current year.
In addition to 42 fewer  students, the particular challenge for the District is the fact that about 82 percent of the District’s budget is for wages and benefits. In a business that’s centered around people, Superintendent Bradley Bergstrom said, the budget adjustments will impact people.
Bergstrom said the District will do what it can to have the least impact, create the least amount of anxiety and be respectful to people who have to find other employment. He said the District will be transparent in this process and discussions, while maintaining confidentiality with the budgeting process.  He also said they won’t assign an across-the-board budget adjustment for each of the schools, and they will continue to look at ways to increase revenue as well as decrease expenditures.
Throughout this process, the overarching goal is to have the least impact on students and student achievement.
Monson-Ek said the information has been presented to staff in all of the buildings and the staff is aware of the challenges now facing the District.
Mike Spears, chairman of the Board of Education, said the Finance Committee had been examining the situation and had set a goal of adjusting next year’s budget by $500,000 at a minimum. He said they would like the schools and district to look at adjustments beyond that and prioritize them so the board knows what’s more important when it has to make its final decision.
A resolution for discontinance is anticipated at the Feb. 13 meeting.