As I portrayed in a recent article I wrote, school finance in Minnesota is complicated and not easy-to-understand. I shared information about events taking place in St. Paul and how they might affect the Morris Area School District's financial situation. In this article, I will share information about discussions taking place across the state and how what is being discussed might potentially affect ISD 769.
The $6.2 billion budget deficit that the Legislature and Governor are working on is frightening. At the Minnesota School Boards Association Conference last month, one of the speakers shared their version of how difficult of a challenge our elected officials have to balance the budget. He stated that if school aid was delayed/shifted to 50/50 (currently at 73/27), if a racino became a reality (adding traditional casino gaming to Canterbury downs, which is projected to annually generate $250 million in state taxes), and if clothing was taxed, there would still be a very large deficit. In addition, he went on to say that if taxes were increased on the "rich", if school funding was reduced by $1 billion, and if health and human services was cut by $1 billion, there would still be a $1 billion deficit to figure out. That was staggering.
To add additional perspective and make it relevant, a $1 billion reduction to schools would mean about a 10 percent reduction in the basic per pupil aid amount for each of the next two years - in other words, that would mean nearly $500,000 less revenue for our district each year for the next two years. In addition, shifting state funding for schools to 50/50 - which means we would receive 1/2 of the money we should during the current fiscal year, and the state would use the delayed 1/4 to "balance" their budget - would create cash flow challenges for the district and likely make it necessary to continue to borrow money to cover cash flow. Of course, borrowing money means interest has to be paid and an additional expense would be added to the district. I would liken the state shifting funds (delaying payments) to a loan from school districts to the state, although the state does not pay interest on the loan.
It is worth noting that federal stimulus dollars have played an important role in creating and maintaining jobs, both in the private and public sector, for the last two years. These short-term solutions have helped create and maintain jobs in our district. In fact, our district received roughly $127,000 in stimulus funding each of the last two years. These funds allowed us to maintain current staffing levels and offer the same opportunities for students. However, stimulus funds will no longer be available to us as we plan for the 2011-2012 budget, which will create a gap in our revenue budget of $127,000. Fortunately, another "one time" funding opportunity will help, but only for the 2011-2012 school year.
Late in 2010, the Education Jobs Bill was passed in Washington, DC. Similar to stimulus monies - except focused on creating and/or maintaining jobs specifically in education - the Education Jobs Bill will provide $191,000 in one-time funding to our district. At the January Board Meeting, the Morris Area School Board approved a 2010-2011 budget revision that will "reserve" $127,000 in this year's budget so those funds can be used to plug the hole created by stimulus funds running out after this year. In other words, the School Board decided to apply for the Education Jobs Bill monies this year, only spend a portion of them, and use the remaining balance next year to plug the hole in next year's budget that will be created from the stimulus funds running out (in addition to using these funds to plug the stimulus funding hole next year, we will be able to hire three paraeducators to work with students on an individual or small group basis and targeting math help). This forward thinking by the School Board should help the district maintain current staff and programs for the 2011-2012 school year. However, maintaining programs and staff is certainly dependent on what happens with school funding and what is decided in St. Paul during the next few months.
In the next article, I plan to share additional information about school finances and how the Morris Area District has worked to increase financial stability of the district.