The Bemidji School District is paring down its budget in light of shifting enrollment, minimal increases in state funding and other factors, district administrators say.
Throughout the past few months, the Bemidji School Board has explored ways to address a nearly $944,000 deficit that was projected for this school year and deficit of around $2 million that was projected for the next school year.
On Monday, the board cut staff at elementary, middle and high schools; alternative programs; and other areas of the district. At that time, the board primarily cut licensed staff.
The board also made mid-year adjustments in January. At that time, the board implemented a "soft hiring freeze," called back half the supply and equipment budgets from all schools, eliminated some planned big-ticket purchases and did not fill some vacant positions, according to Superintendent Jim Hess.
District administration also is making non-licensed staff reductions for this school year and the next school year, and will continue to do so, Hess said. Non-licensed staff reductions do not require board action.
Also, the district faces adjusting in its spending budget by $1.1 million by reducing spending and generating more revenue.
One factor impacting the district's budget is shifting enrollment, said Chris Leinen, director of business services.
"It's a significant factor," he said, noting that enrollment is the basic funding mechanism for schools.
While Leinen projects little change in overall enrollment in the next few years, the blend of the student body is shifting from secondary to elementary.
Secondary students, he said, are funded at a higher level than elementary students.
"You can have the same number of kids and fewer dollars," Leinen said.
Meanwhile, he said state funding for education has increased minimally while inflation has outpaced these increases. The state Legislature increased the per-pupil formula by 2 percent for 2007-08, and by 1 percent for 2008-09. Special education costs are also a factor impacting the district's budget.
"Special education costs keep going up so much each year," Hess said.
He said special education services are federally mandated, but not reimbursed at the level they cost the district.
In 2007-08, the district pulled $3.4 million from the general fund to help pay for special education, Leinen said.
The federal government passed a law in the 1970s in which it promised to pay 40 percent of special education costs, with another 40 percent coming from the state and the remaining 20 percent coming from local school districts.
Hess said the federal government's reimbursement has been 17 percent for a number of years.
"They've never come close to the 40 percent that's been promised," Hess said.
Other factors impacting the district's budget include higher energy costs and health insurance costs, Hess said.
He said the costs for heating buildings and fueling transportation had increased recently.
Leinen noted that the increases came in spikes.
"The spikes were huge," he said. "Fortunately, some of those prices have gone down."
Leinen said the district also expects a 10-percent increase in electrical rates for the next school year because the Minnesota Public Utilities Commission is considering a rate increase.
"We're a big, big consumer of electricity," Leinen said.
Meanwhile, the cost of health insurance for employees has increased, Hess said.
Had voters not passed the district's operating levy referendum last fall, the board would have to look at making an additional $3 million in reductions per year, Hess said.
Voters in the district approved renewing the district's current operating levy of $501 per pupil for another five years.
As with the current operating levy, Hess said these operating dollars will continue all-day, every-day kindergarten and the timely replacement of school buses, and reduce class sizes as best as the district can.
"The referendum was a huge help to the district," he said. "And, again, without it, we would be looking at not $2 million in reductions (for the next school year), but $5 million in reductions that would have to be made."
Earlier this year, Leinen presented to the board his five-year budget projection for the district's general fund.
Leinen based his projection on several assumptions, including shifting enrollment, the loss of one-time state funding, no increase or decrease in the state education funding formula for two years and a 1-percent increase in inflation in expenses.
This year, the district is making adjustments in anticipation of a deficit of around $2 million for the next school year.
Next year, the district will revaluate and develop a new five-year projection that includes the results of this year's legislative session, Leinen said. Also, new negotiations and enrollment information will be available. Each year, the district makes projections and adjusts the budget accordingly, Leinen said.
"It's an ongoing process," he said.