District eyes cash-flow shortage

The Brainerd School District is looking at an estimated $2.2 million cash-flow shortage for the upcoming school year and will have to borrow that money to make its payroll and other monthly bills.

That shortfall is due to Gov. Tim Pawlenty's $1.77 billion K-12 education funding shift in state aid payments as part of his plan to balance the state's budget, said Steve Lund, Brainerd School District director of business services.

"It was thrown on the backs of the school district right now and created the need for borrowing," Lund explained to school board members Monday. "If we have a shortfall next year, we will be faced with cuts."

Under Pawlenty's plan, school districts received 73 percent of their funding on July 1 and will get the remaining 27 percent on July 1, 2010. Lund said that normally the district receives 90 percent in the year that expenses are incurred and 10 percent the following year and usually the district has enough cash to meet its expenses. In addition to the funding shift, school districts don't have the $51-per-pupil unit in state aid that lawmakers provided districts last year.

The district in recent years has been borrowing funds on a short-term basis through the sale of $4 million in general obligation aid anticipation certificates to be used if it experiences cash-flow problems as a result of its dwindling unreserved fund balance. In the past, the district often did not need to use the money and earned interest on the 13-month loans.

Lund said that if the funding shift had not occurred, the district would not be having cash flow problems.

Lund said the district again will call for the sale of aid anticipation certificates this fall, and instead of only drawing interest on the loans, it will need to use them. The district also will lose out on about $90,000 in earned interest that has been budgeted for next year. The interest on the loan and other expenses come directly from the school district's budget and the shift in aid payments from the state will cost the district about $12 per pupil unit, he said.

Lund said the Brainerd district is more fortunate than other school districts in the state. The shift in aid payments will cost some districts up to $40 per pupil unit, Lund said.

Lund said he'll likely be asking board members for approval of the sale of general obligation aid anticipation certificates at the regular board meeting in September.

In board action, the board hired the following new certified staff members: Gina Czech, Forestview sixth-grade teacher; Emilee Freed, Brainerd High School special education teacher; Jason Freed, BHS social studies teacher; Brian Gustafson, Forestview physical education teacher; Heidi Henkes, Garfield kindergarten teacher; Maria Macioce, BHS English teacher and Shannon Thifault, school psychologist.

The board approved the district's wellness policy.

The board heard from Willy Severson, director of schools, that projected school enrollment has increased by 31 students since June to 6,864 students. The preliminary kindergarten class has increased from 509 students to 516 students, Severson said.