MORRIS - In a 4 to 1 vote, the Morris Area School Board passed an approximately $3.2 million levy, the maximum allowed by the State of Minnesota, for the 2012-2013 school year at their meeting on Monday night.
Board Chair Kurt Gartland cast the lone dissenting vote. Board member Laura Carrington, who previously said she would not vote to increase taxes, was not at Monday's meeting.
The levy is an increase of about $138,000 over the 2011-2012 levy, an increase of about 4.52 percent.
During the board's discussion, the question of whether to approve the maximum levy or reduce the levy for this year came down to different opinions about what budget strategy would be best for the district in the long term.
Gartland argued that the district should under-levy this year, proposing a figure of about $30,000 less, as a way to ensure fiscal discipline - if the district maximizes the levy the district may be tempted to spend it all rather than keep expenses down in case funding becomes unstable in the future.
"If go out and we maximize that levy, then we're living with that level of levy income coming in and we have no way as a district to handle the budget increases we're going to have each year," said Gartland. "We're locking ourselves in."
"In any budget, if you get used to living at that level you're going to use that money," said Gartland. "As we can stabilize our revenue increases, we can stabilize our expenses as well. It is a discipline that I think is healthy for the district overall."
Board member Lory Lemke disagreed with Gartland's suggestion, arguing that cutting the levy now would give up potential income now and possibly threaten the district's relatively-healthy fund balance.
"If we under levy this year, we're going to be taking in less money," said Lemke. "We really don't know how to balance our budget for the next five years - there's a lot of unknowns. ... Right now we're comfortable because of our fund balance. I think we need to protect that and I think we need to build it up as much as we can."
Board member Jamie Solvie said he would like to see the maximum levy, but that the board should restrict some of the funds for upcoming capitol improvement projects.
Board member Stan Wulf said that the budget still comes down to the fact that the district needs to have discipline with spending - "I know that's easier said than done" - but that instability at the state level means more money will need to come from local districts.
Earlier in the evening, at the district's sparsely attended Truth in Taxation hearing, Superintendent Scott Monson outlined the forces that impact the school district's budget and what the budget for 2012-2013 looks like.
Across the state, basic general education revenue per student has not kept up with inflation, said Monson. Although the district's per-pupil funding did increase by $50 per student in the 2011-2012 school year, Monson said this is not enough to keep up with the district's expenses, which increase by two to four percent each year.
To make up for these shortfalls, districts across the state have turned to voters to renew or increase operating levies. At the same time, economic forecasts indicate there will be no increases in funding beyond 2012-2013, said Monson.
The district's budget is divided into seven operating funds. The largest fund, the general fund, accounts for most of the district's daily operating expenses. Nearly 75 percent of the revenue in this fund is tied to student enrollment, said Monson, and the revenue in the general fund accounts for 73 percent of the district's total revenue.
Other funds include the food service fund, community service fund, debt service fund, trust fund, and two "Other Post Employment Benefit" funds.
"Not unlike other districts," most of the expenses in the general fund are used to pay employees, said Monson. Sixty-three percent is dedicated to salaries and wages and another 15 percent goes to employee benefits.