WILLMAR -- The Willmar School Board has adopted a budget for the 2011-12 school year, but it's likely to be revised a couple times.
Even without a state budget in place, Minnesota's public schools are required to adopt their budgets before the next fiscal year begins on July 1.
"Our budget is based on quite a few assumptions," said Business and Finance Director Pam Harrington at Monday's board meeting.
The original budget document for the school district always contains some assumptions because not all information is available about pending grants and other matters.
This year, the situation is even more complicated. Gov. Mark Dayton and the Legislature have not reached agreement on the two-year state budget which begins July 1. The state provides more than three-quarters of the budget for Minnesota schools.
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Harrington said the budget was developed with the assumption that the state's basic education funding formula would remain the same for the coming year.
It's unknown when a budget agreement may be reached. Superintendent Jerry Kjergaard said some people speculate it may not come until September or later.
The budget assumes general operating fund revenue of $41 million in the coming year, a drop of about $2 million.
The district expects to receive $1.3 million less in federal funding due to the expiration of federal economic stimulus funds.
Because state aid is based on enrollment, income from the state could decrease with an expected 40-student dip in enrollment.
General fund expenditures for the coming year are estimated to be about $42 million, but those figures will also be adjusted during the year. Harrington said salaries and wages will decrease because federally funded employees have been laid off, but that will be partially offset by staff salary increases related to experience and additional education.
The general fund also includes $700,000 for retirement severance pay for long-time employees. It's possible that not all of that money will be needed, she said.
The district will have an unassigned general fund balance of about $7 million at the end of June. The fund balance helps the district maintain cash flow in between state aid payments and can also be tapped if state revenues are cut or withheld.
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In all budgets, including food service, community education and debt service, the district anticipates revenue of $48.5 million and expenditures of $49.7 million. The fund balance in all funds is expected to decrease by the end of the year from $8.8 million to $7.5 million.
Many school districts in the state may need to borrow money to keep paying their bills while the state budget battle continues.
Financial firms that work with schools are planning on issuing bonds for groups of schools this summer and also in the winter and spring, Harrington said.
She said she feels the district has enough money to manage its bills through January. It also has a $750,000 line of credit that could be tapped for short-term cash flow needs.
Depending on the state's financial situation next winter, she said, she may recommend borrowing then. "We don't want to cost the school district more money that we need to," she said, and the fees on the aid anticipation bonds could be more than $10,000.
