School district is in good shape for now — but

Published 7:26 am Thursday, January 21, 2010

The economic environment is an endless source of anxiety these days. We worry about fiscal irresponsibility, government budget projections and mounting health care costs. So it should not surprise me that a common school board question I get from community members relates to how Albert Lea Area Schools are doing financially and how the latest news of revenue shortfalls at the state level will affect the district.

To answer this question an initial understanding of what happened during the last session is an important starting point. Education funding provided the largest opportunity for our state lawmakers to “cure” the state deficit last session.

Done primarily in two ways, the legislators and governor used federal stimulus money to backfill a one-time reduction in the general education formula — and in addition — instituted a payment shift resulting in many districts eventually needing to borrow money to cover operating costs. This resulted in essentially a no net increase in revenue for Minnesota school districts for the 2009-2011 biennium.

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The stimulus money provided the state lawmakers the opportunity to cut public education funding to almost $1.2 billion, and the payment shift they enacted added over $600 million to the total.

Therefore, the first part of the answer, to the question, is: OK for now — but. The concern with these two actions is whether the state lawmakers in the next biennium will restore the portion they cut and whether they will choose to hold spending flat for another two years or longer. If they do so, then in terms of real dollars, that is a cut to the district revenue because of the rate of inflation. As for the payment shift, the question is — will the state pay back this funding shift or decide to “unallocate” a percentage or the entire portion of this education-funding shift?

Consider the list of potential and existing financial issues the school district is monitoring:

1. Potential cuts to education funding in the next biennium.

2. Negative returns of large public sector investment portfolios, which affect the district.

3. Rising cost of health insurance.

4. Continuing cost ramifications of No Child Left Behind.

5. Deteriorating Minnesota budget revenue projections.

6. Possible utilization of local undesignated fund balances to help balance the state’s budget.

7. Disparities in special education funding.

8. Enrollment trends.

9. Financial impact of Minnesota’s baby boomers as they start to retire.

Financially, the district is in good shape for now. Our fund balance is healthy because of your local support through the referendum and past sound financial planning.

However, any one of the above issues has the potential to affect the district’s financial future, despite the plans and goals of our referendum. Couple some or all of these together and we have the potential for a perfect financial storm. It comes as no surprise that fiscal planning has become more conservative and the request for staff to do more with less has become our common language just like other public and private entities.

Part of the solution for these impending problems is to get back to the basics. I am not talking the “Three R’s.” I am talking about state financial basics — reaffirming our commitment to educating our children as our state founders outlined in Article VIII, Section 1, of the Minnesota Constitution that states, “it is the duty of the Legislature to establish a general and uniform system of public schools. The Legislature shall make such provisions by taxation or otherwise as will secure a thorough and efficient system of public schools throughout the state.”

If we believe, as our ancestors did, that it is our duty to provide a strong future for the children of this great state, then it will require the mutual sacrifice of our individual needs. A commitment by the public and our elected officials to prioritize needs based on fundamentals will steer a clearer course through these troubled times. If we continue to try to do all for the many, then the storm will only grow and never pass.

Bill Leland is the chairman of the Albert Lea school board.