SPICER — A confluence of events has led New London-Spicer Public Schools to a financial crisis, Superintendent Bill Adams said Thursday.

Adams spoke to a small group of people at a public meeting Thursday at Spicer’s Dethlefs Center to explain the school district’s financial situation.

The district plans two more informational meetings, one at 6:30 p.m. Monday at the NLS Performing Arts Center and another at 8 p.m. Wednesday via Zoom. A link to the Zoom meeting can be found on the district’s website, nls.k12.mn.us.

The meetings are leading to a School Board retreat June 29 when the board will review community feedback and decide on the district’s next moves. The board could decide to seek revenue through another referendum, make more cuts or do a combination of the two.

Since the defeat of an operating levy in the 2020 election, the board has made budget cuts and appointed a task force to study the district’s financial situation. It is now in the process of holding community meetings.

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A variety of factors have led the school district to the point of being in danger of entering what the state Department of Education calls statutory operating debt.

Adams listed them at the Thursday meeting. They include state aid that has not kept pace with inflation, ballooning special education costs, lower property tax revenue than nearby districts and a general fund balance that is 1.26% of annual expenditures.

School finance experts recommend a fund balance of 17%, he said. A fund balance allows a district to maintain cash flow between state aid and property tax payments.

Jon Noeldner of New London, right, asks a question during a public information meeting for the New London-Spicer Public Schools as his wife, Naomi Noeldner, listens.

Linda Vanderwerf / West Central Tribune
Jon Noeldner of New London, right, asks a question during a public information meeting for the New London-Spicer Public Schools as his wife, Naomi Noeldner, listens. Linda Vanderwerf / West Central Tribune

School districts are required to provide a free, appropriate public education to all students, something Adams called a “moral imperative.” However, subsidies promised by federal and state governments years ago for special education students have never met expectations.

That leaves local districts picking up costs, called the special education cross-subsidy. The cross-subsidy in NLS began to exceed $1 million a year with the 2017-18 school year.

Budget cuts already made include a freeze on salaries, reducing spending on staff development, eliminating the Chinese course and reduced school board compensation.

A large savings was realized when 13 teachers retired and were replaced by new staff members with lower salaries, Adams said, but that isn’t going to happen every year.

Cuts for next year could include eliminating 2.5 teachers, a school resource officer and the gifted-and-talented program, plus cutting boys tennis and girls golf.

Jonathan Silva of Willmar speaks to New London-Spicer Superintendent Bill Adams during a public information meeting for the New London-Spicer Public Schools as the district makes decision about its future finances.

Linda Vanderwerf / West Central Tribune
Jonathan Silva of Willmar speaks to New London-Spicer Superintendent Bill Adams during a public information meeting for the New London-Spicer Public Schools as the district makes decision about its future finances. Linda Vanderwerf / West Central Tribune

There is a danger in making cuts, Adams said. NLS students could use open enrollment to go to another district that offers a program that was cut. Students who now attend NLS through open enrollment could return to their home district.

“There could be no savings because of lost revenue,” he said, referring to the state aid that would be lost if students leave the district.

Information about the district’s financial situation can be found at www.nls.k12.mn.us/anewdirection.