While the Brainerd School District budget will be balanced for the 2008-09 school year after $5.5 million in budget reductions are made this spring, it won't mean the school district is completely out of the woods.
It would take four years of 4 percent increases each year in the general education funding formula for the district to grow, rather than continue to deplete, its unreserved fund balance, Steve Dickinson, director of business services, told the School Board Finance Committee on Thursday.
The chances of this happening are unlikely, he said. The district has, on average, received 1.8 percent state formula funding increases in recent years, which includes the two years of no increases.
Instead, Dickinson presented school board members with a budget scenario through 2013, which showed that with a more modest 2 percent increase in the state general education formula and a 2 percent increase in employee settlement costs each year, the district will have a projected negative unreserved fund balance of $158,170 during the 2010-11 school year if there are no other revenue increases. This negative unreserved fund balance would continue to balloon, if no budget cuts occurred or no new revenue sources appeared, to a $9.8 million deficit in 2013.
"It's just ugly," Dickinson said when he plugged in even smaller percentage increases from the state into the budget worksheet as a worst-case scenario. "We wouldn't have too many teachers left in this district."
Dickinson said a 1 percent increase in the general education formula equals about $400,000 for the district. A 1 percent increase in employee settlement costs equals roughly $650,000. While the district is projecting a small increase in student enrollment during the next two years, the district may lose students next fall because of the $5.5 million in budget reductions. While the district is conducting a student survey this spring, it won't know how the budget cuts affect student enrollment until seeing who shows up for classes next fall, Dickinson said. The district is projecting a loss of about 100 students next year, but that figure isn't based on any historical reference, Superintendent Jerry Walseth said.
The Finance Committee recommended for board approval revisions to the 2007-08 budget, which included updated information on enrollment and utilities. The June 30, 2008, unreserved fund balance is estimated to be $209,469, or .29 percent of total general fund expenditures. That's down slightly from the original estimate of $276,730, or .4 percent, Dickinson said.
Walseth told board members that the district learned Friday that the state is projecting that it will have to reduce its reimbursement for special education costs to school districts this year, money the district has been counting on in its budget. Walseth said the special education formula hasn't changed, but because there was more demand statewide in special education dollars, the state is planning to reduce the payout to districts. Brainerd would see a reduction from about 88 percent to about 80 percent of total special education costs. The district cannot, by law, then reduce its own special education expenditures but has to absorb those added costs from its general classroom expenditures, Dickinson said.
Walseth pointed out that the district in 2003 had 508 teachers and about 7,200 students. At the end of the 2006-07 school year, the district had 466 teachers and just under 7,200 students. If student enrollment remains on par next year, the district will have 7,200 students but only 400 teachers.
In 2003, Walseth said the district served a 12 percent special education student population. The special education population in the district has grown to 13.1 percent, which means there are about 275 remaining regular classroom teachers to support the rest of the student population.
"And that equates to class size," Walseth said. "It grows significantly."
JODIE TWEED may be reached at firstname.lastname@example.org or 855-5858.
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