While most of the information wasn't new to the board, the Brainerd School Board Finance Committee took a look at some of the greatest financial uncertainties facing the district over the next four years.
Steve Lund, director of business services, provided board members with an overview Monday of several issues that will affect the district.
Federal stimulus funds
Lund said lawmakers backfilled an 8.7 percent reduction in state stabilization dollars with federal stimulus funds for K-12 funding to help balance the state's budget. Will the state be able to replenish this $500 million, Lund questioned. He said the impact for the district is about $8.6 million.
The district also received an additional $1.6 million for IDEA/special education, which will end in two years. The district also received an additional $600,000 in Title I funding, which will end in two years.
Staff development funds
The 2009 K-12 omnibus bill waived the 2 percent set-aside requirement. The district still committed $300,000 to staff development but used about $500,000 in its general fund budget to hire more staff. If the 2011 omnibus bill eliminates this waiver, it will affect the budget by $500,000, said Lund.
Employee union settlements
The school board is continuing to bargain with all of its nine union groups and is currently in mediation with two of the seven non-certified groups, including the educational assistants and food service workers, which are represented by Education Minnesota Brainerd, said Lund. All seven non-certified union groups are working under contracts that expired in June of 2008 while the two certified groups are working under contracts that expired in June of 2009.
A 1 percent salary increase for all labor groups would cost the district about $500,000 a year in additional expenses, said Lund. Lund said no salary increases are in the budget and would need to be covered by either a reduction in the unreserved fund balance or offset by staff reductions.
Lund said the district has already made significant reductions in supplies and other contracts so there are few other options other than salary and benefit reductions.
Unstable future of TRA
Lund said the Teachers Retirement Association, a statewide public pension fund, sustained an investment loss of about 19 percent last year, following a 5 percent loss the year before. This, coupled with meager investment returns for the past decade of 2.4 percent annually, rather than an anticipated 8.5 percent return, has meant that the fund will be depleted during the decade of the 2030s, said Lund.
Lund said the district contributes 5-1/2 percent of a teacher's salary for TRA. He said potential legislative outcomes to resolve this could include increasing employee and employer contribution rates, reducing active member benefit provisions and freezing retiree benefit increases for two or three years beginning Jan. 1, 2011. He said a 1 percent increase in the employer contribution would cost the district about $500,000 a year. He said this issue likely will be addressed in an upcoming legislative session.
Rising health insurance premiums
More than 100 new participants were added to the district's health insurance pool in September, said Lund. He said the district's administrator, Blue Cross Blue Shield, has increased its costs.
Expiring operating levy
The district currently has a $199 per pupil operating levy that generates $1.5 million of revenue for the district. The 2012-13 school year will be the first year without this revenue.
Lund estimated the potential budget impact of all of these factors on the district's budget at $500,000 for 2009-10, $1.9 million for 2010-11, $2.6 million for 2011-12 and $3.5 million for 2012-13.
These figures do not include the $4.3 million in state stabilization funds for each of the 2011-12 and 2012-13 school years that the state used to help balance the budget.
JODIE TWEED may be reached at email@example.com or 855-5858.
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