This letter was sent by email to parents of all students in District 191 on April 29, 2015.
This is the time of year when our Board of Education develops a new budget, so here’s an update on this process for the 2015-16 school year.
Thanks to the financial stewardship of the Board, we have been fortunate to increase services in recent years while maintaining a healthy budget reserve (savings account) in the General Fund, which supports the educational program including salaries, transportation, utilities, classroom supplies, and more.
Over the last two years, expenses have been more than revenue, and so our Board has been spending down the budget reserve on purpose and using savings to balance the budget and maintain programs. Unfortunately, we can’t keep taking from the reserve. Our budget must bring our expenses in line with our revenue so we do not spend more than we receive. This will mean budget reductions.
Here are some answers to questions you may have.
Q: Why doesn’t our revenue cover our costs?
A: Most of our funding comes from the State of Minnesota and it has not even kept pace with inflation for more than 20 years. While the cost to maintain our current programs increases by about 3.75% (nearly $4 million) each year, our funding from the state has increased by only 1% (about $600,000) on average. This has created a funding gap. Many other school districts will also be making reductions.
Q: Voters just approved two referendums, how could we be short of money?
A: Voters approved a building bond and a technology levy to be used for specific purposes. Neither is allowed under state law to provide money for day-to-day operations. Whether or not the referendum questions were approved, we would be looking at reductions because our operating costs increase about 3.75% each year, and our revenue does not. We cannot continue to spend more money than we receive.
Q: What budget reductions will be made?
A: No decision had been made yet. Our Board asked for possible budget reductions that would maintain at least a 10% budget reserve (about one month’s expenses). This would mean reductions of about $6 million. Priority has been placed on preserving student programs and maintaining elementary class sizes at the same level with only a slight increase in secondary class sizes by an average of one student per class.
Q: Why make reductions in staff?
A: Only 20% of our budget is made up of non-staff costs such as utilities, transportation, supplies and other operational areas. We have reduced as much as we can in these areas and still provide required services. Unfortunately, the only way we can reduce enough is to address staffing because 80% of the General Fund budget goes towards salaries and benefits. In addition, as our community has aged, our enrollment has gradually declined over the last few years, and it's important that we adjust staffing proportionally. Combined with inadequate funding from the state, proposed reductions amount to about 68 positions throughout the district at every level.
Q: What happens next in the budget process?
A: At a workshop last week, Board members received a list of possible budget reductions amounting to $6 million. Their first step will be deciding what level they want the budget reserve to be next year. The budget will be the topic at a Board meeting at 7:30 p.m. on Thursday, April 30, at the Senior Campus Commons at Diamondhead Education Center. The meeting will be streamed on our website at www.isd191.org and also archived there. Budget updates will also be available on the district website.
Q: What are some ways the district has saved money recently?
A: Recent savings include:
- Refinancing debt to lower interest rates
- Switching to Gmail for email to save $2 million over five years.
- Recycling and energy conservation
- Becoming a self-insured district to keep health insurance increases to single digits rather than double digits as it had been
- Establishing a reliable copier service provider/lessor
- Continually seeking savings through review of expenditure categories unrelated to staff such as waste management, copier leases, telecommunications, office supplies, e-payments and insurance processing.
Making budget reductions is certainly not what I wanted us to be doing, but we must reduce spending to maintain the fiscal health of our district. We cannot continue to spend more than we receive. Our focus must be on Vision One91, our plan to redesign our school district to meet the needs of today’s learners and ensure each student is real-world ready. Spending for next year must be on priorities that provide the most benefit for our students’ learning and their future success.
Superintendent of Schools