First steps toward cuts recommended

Facing a projected $3 million budget shortfall for the upcoming fiscal year, the Brainerd School Board finance committee voted Wednesday to recommend to the school board some first steps to begin making sizable budget cuts.

The committee recommended a $1 million target reduction in the unreserved fund balance, which will help offset staff and program cuts. The unreserved fund balance is estimated to be about $5 million, or 8 percent, as of June 30. The committee also directed school administrators to present a prioritized list of $2 million in proposed budget reductions to the finance committee at its next meeting, which will be 3:45 p.m. March 29. At the committee's April 7 meeting, the list of budget reductions is expected to be finalized and recommendations forwarded to the school board.

The committee also reviewed the many recommendations for budget reductions provided by staff and community members as a result of the recent community survey. There is still time until the March 29 finance committee meeting for area residents to offer their advice to the school board on their educational priorities. The survey can be filled out at the district's Web site at www.brainerd.k12.mn.us. Visitors also may view all comments made by those who have already filled out the survey, said Steve Dickinson, director of business services.

About 218 school district staff members filled out the survey while 28 community members also submitted completed surveys.

Of the staff surveys received, 172 staff members said they would encourage the Legislature to increase school funding while 125 staff members said they would support an operating referendum to increase school funding for the Brainerd School District. Thirty-one staff members said they would implement across-the-board reductions with little input if they were on the school board while 126 staff members said the board should seek community input to ensure the highest priorities of the school district are met.

Of the surveys received from community members, 26 people said they would encourage the Legislature to increase funding for all schools while eight people said they would support an operating referendum for the school district. Two community members said they would implement across-the-board reductions with little input while 23 people said they would seek community input when balancing the school budget.

While committee members requested a list of $2 million in potential budget reductions from district administrators, they quickly pointed out that the budget reductions made for next year won't be $2 million. Dickinson said it's unclear how much relief state lawmakers are willing to provide this legislative session for education, but Gov. Tim Pawlenty's proposal calls for a funding increase that would give the school district an additional $423,000 in funding. He said this is a conservative figure for legislative relief and districts won't find out how much funding to count on for the 2005-2006 fiscal year until June or July.

The $423,000 proposed legislative increase and the proposed spending down of $1 million of the district's unreserved fund balance would mean the district is looking at about $1,577,000 in staff and program cuts during the upcoming fiscal year, said Dickinson. He said proposed legislative increases for 2006-2007 would add $975,000 to the district's budget and if the district spent about $900,000 out of its unreserved fund balance then the budget cuts the following year would be about $1.125 million, depending on how deep the district wished to spend down its fund balance.

Committee members discussed whether it was important to retain a healthy fund balance or spend it down. The district has historically kept its fund balance around 11 percent to maintain a healthy cash flow so the district wouldn't have to take out short-term loans. The district has a $63 million budget.

Board member Kent Montgomery said when he and a few other board members recently met with legislators at the state Capitol, they indicated if a district has a healthy reserve fund yet facing budget shortfalls it should spend down its fund balance because it appears to the community and lawmakers that the district has the money it needs. Board member Lew Hudson said he would like the board to reexamine its policy on fund reserves.

"I heard legislators say, you've got $5 million in the bank and you say you're in trouble?" said Hudson. "I'm hearing that from the public as well."

Board chair Bernie Roberts said he feels apprehensive about letting the district's unreserved fund balance become too low.

While the committee set its fund balance target reduction at $1 million, this figure could increase or decrease depending on the Legislature and the final amount of budget cuts the board chooses to make.

JODIE TWEED can be reached at jodie.tweed@brainerddispatch.com or 855-5858.