District may need to cut $1.4M from budget; that could be just the beginning

WILLMAR -- The Willmar School District is planning another round of budget cuts before the 2010-11 school year.

Early estimates are that the district may need to cut $1.4 million from its budget, but that could be just the beginning.

Depending on how the state handles school funding issues in the next year, Willmar and most other districts in the state could see anticipated revenue fall far short of their needs.

The School Board heard a report on the district's financial position and on enrollment levels at a recent workshop.

Enrollment offered some good news. The district's official enrollment for 2008-09 appears to have exceeded predictions by about 1.5 percent. The state looks at how many students the district had through a school year and determines an official enrollment figure, called the average daily membership.

The district had projected having an average of 4,014 students per day during the last school year. The state's calculations indicate the district actually had 4,076 students.

Business and Finance Director Pam Harrington said the district has revised its projections based on the new information and now expects to have 4,050 ADM for the current year.

The enrollment number is important, because many state or federal aid payments are based on student numbers.

Superintendent Jerry Kjergaard said Thursday that the district didn't see as many students leave the district as in some years. Parents "had jobs here; they didn't leave," he said. "As a result, we didn't lose as many kids."

Revenue in the last year was $41.3 million, more than budgeted because of increased enrollment, Harrington said. Expenditures were $42.8 million, which was $1.4 million less than budgeted. The district had planned to use its reserve funds to make up the difference between revenue and expenditures.

The district's undesignated, unreserved fund balance at the end of the year was about 2.8 million, 6.56 percent of general fund expenditures. The reserve is larger than expected, in part because of the higher enrollment and because of budget cuts made before the year began.

"This doesn't mean we can stop doing what we've been doing," Harrington said. "The only reason we are where we are at is all the hard work that everyone has done -- the community, the staff, everyone."

Two decisions made on the state level last spring could affect the financial well-being of school districts around the state, including Willmar.

The state took money out of the education budget and replaced it with one-time federal economic stimulus money. Eventually, the state will either have to put state money back into the budget or cut school funding by that much.

Harrington said Willmar will receive $2.5 million in federal stimulus money this year.

After the legislative session, Gov. Tim Pawlenty made his own budget cuts through a process called unallotment.

Pawlenty decided to provide schools with just 73 percent of their 2009-10 state aid payments during the current fiscal year. Payment of the remaining 27 percent was shifted to the 2010-11 fiscal year.

School officials in the state built their budgets for the current year before Pawlenty implemented the shift. Now, many worry that the state will not replace that funding.

"That 27 percent is getting scarier and scarier every day," Harrington said, because budget projections indicate that the state could be facing a budget deficit of $4.5 billion or more.

"We don't even know if we're going to get the 27 percent," she said.

If the state tells districts they won't be receiving the money, Willmar would lose as much as $10 million, she said. Most of the districts in the state could be plunged into debt.

Superintendent Jerry Kjergaard told the board members that the district would find it difficult to cut $10 million from its budget.

"At some point, we could look fundamentally different, but all of the education system throughout Minnesota would," said board chairman Brad Schmidt.

The uncertainty can make planning difficult, but "whatever happens, we're going to do what's best for our kids," Kjergaard said.