NLS anticipating $477K revenue loss in 2009-10; end of one-time funds, declining enrollment show substantial decrease for district
NEW LONDON -- Seven months ago, voters in the New London-Spicer School District supported a $200-per-student operating levy increase for the 2010-11 school year.
However, after the state Legislature failed to balance the budget and the governor's unallotment, the 2010-11 school year may not arrive quickly enough for the district.
During Monday's regular meeting, the School Board gave final approval to the 2009-10 budget. While NLS will have another school year with positive budget figures, there's more to the district's situation than its expenditures amounting to less than projected revenues.
First, based on a couple state funding areas, the district expects to lose up to $477,880 in revenue for the 2009-10 school year. Secondly, while NLS expects to have $177,903 in its general fund by the end of the upcoming school year, more than $160,000 of it would come from federal stimulus money the district will try to acquire from the state Department of Education.
Superintendent Paul Carlson said Wednesday the district predicts it will lose about $205,000 in enrollment-related funds from the state. The district will also lose about $91,800 from a one-time fund the state and provided since 2007, Carlson said, and an additional $99,000 from an operating technology and equipment fund that ends this year.
Ultimately, Carlson said, the district expects to lose $477,880 in revenue in 2009-10 when it expects to spend around $12.2 million.
In May, the School Board tried to anticipate such a loss by approving budget reductions worth $300,436. Carlson said the cuts helped the district nearly match the lost revenue as the board planned a $477,036 decrease in expenditures for 2009-10.
Nonetheless, the district's general fund is at $177,903, pending the funds from the American Reinvestment Recovery Act, Carlson said.
"Without that, our fund balance would be under $10,000," Carlson said. "But we're still working out the details and mechanics of how we will get that revenue."
The district's voters approved a new levy in November worth $597 per student. The new levy may not provide the kind of financial relief the district had expected.
According to the Gov. Tim Pawlenty's plan for schools, the state will withhold an additional 17 percent of district funding until the following fiscal year. In the past, school districts received 90 percent of their funding during the fiscal year and only 10 percent was withheld to the following fiscal year.
"(The levy) will be hampered by that. That is something we couldn't foresee back in November 2008," Carlson said
"So we're going to have to live within our means to see how this all pans out."
With the lower percentage of funding distributed in the first year, Carlson said NLS expects to borrow an extra $2.7 million for cash flow.
"With the low fund balance we have, there's going to be cash flow issues, which is why we'll have to borrow through aid anticipation certificates," he said, referring to a commonly used financial tool.
Carlson said the district expect to pay an extra $30,000 in interest for borrowing that money to cover its school year expenses.
The federal stimulus "came at a perfect time to close that gap for next year for us," Carlson said, but the following year will be difficult with no increase in state funding.
"Everything we do for the next two years and beyond will hinge upon" the whole NLS community working together, he said.