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Budget projections show impact of losing operating levy

The Bemidji School District will face heavy cuts in the future if the current operating levy expires without renewal.

Director of Business Services Chris Leinen noted this outlook in reviewing a five-year budget projection model that he will share with the Bemidji School Board at its meeting Monday. The board will meet at 4:30 p.m. in the Bemidji High School Media Center.

Without the renewal of the current operating levy, the school district will lose a total of $3.2 million per year after the levy ends, Leinen said.

The school district's proposal to extend and expand the levy failed in last fall's referendum. Although board members have discussed holding another referendum this fall, no official plans have been made.

The last year the school district will receive dollars from the current levy is the 2008-09 fiscal year, which is next year.

Leinen projects the school district will experience an $874,648 operating deficit because of the state's "under-funding" of K-12 education that year, which is the second year of the current two-year budget cycle.

The state Legislature increased the per-pupil formula by 2 percent for the 2007-08 fiscal year, which is the current budget year, and by 1 percent for the 2008-09 fiscal year. For the first year of the biennium, the Legislature also targeted additional money toward special education.

If the school district does not make any adjustments to minimize the projected operating deficit for the 2008-09 fiscal year, it could experience an operating deficit of nearly $4.13 million during the 2009-10 fiscal year, Leinen said.

He said this projection is based on the potential loss of operating levy dollars -- which would also trigger the loss of equity funding from the state -- and the carry-over effect of the state's "under-funding" of K-12 education during the 2008-09 fiscal year.

As a result of the Legislature "front-end loading" the funding for the biennium, the school district is projected to have an operating surplus of $86,751 this year, Leinen noted. Last year, the school district had an operating deficit of $301,086.

The five-year projection model Leinen will share with the board Monday applies enrollment projections and assumptions about future revenue and expense trends.

He said revenue assumptions include a 3 percent annual increase in the per-pupil payment by the state and stable enrollment gradually increasing in later years.

He said expenses are assumed to increase at 2.5 percent per year and no enrollment-based staffing changes are built into the model.

Listening session

The board's monthly listening session will be held from 3:45 p.m. to 4:15 p.m. Monday in the BHS Commons. Board members Gene Dillon and John Pugleasa will be available to visit with the public.