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Future finances: School Board talks include referendum

The Bemidji School Board is beginning the early stages of planning for an operating levy referendum this November.

Superintendent Jim Hess said some dramatic indicators show that a referendum is essential to the school district.

"It just seems to me that we wouldn't have the same district without that referendum in place," he said at a special board meeting Monday night.

Hess suggested the board begin generally discussing a referendum and start looking at a general timeline. He also recommended that preparations for the referendum start prior to summer break.

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, Director of Business Services Chris Leinen said in a February interview.

The school district's proposal to extend and expand the levy failed in last fall's referendum. The last year the school district will receive dollars from the current levy is the 2008-09 fiscal year, which is next year.

Ann Long Voelkner, chairwoman of the board, is organizing a preliminary referendum steering committee meeting for 7 p.m. Thursday at the District Office.

"This is the preliminary discussion because we need to start now with this discussion," she said.

Although the board is discussing holding another referendum this fall, no formal decision has been made yet.

As soon as possible, board member John Pugleasa said, the board should make a formal decision to hold a referendum as well as have a rough idea of how many dollars to request and why.

The board plans to discuss the referendum further at a work session in April.

Also at the April work session, the board will examine ways to adjust the operating budget for the 2008-09 fiscal year by $692,192.

Leinen is projecting that the school district will need to make adjustments in this amount to remain at an 8 percent general fund balance. A school district policy calls for a general fund balance of approximately 8-10 percent of the fiscal year budget.

Leinen projects the school district will experience an $874,648 operating deficit in fiscal year 2008-09 due to the state's "underfunding" 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.

"The major financial concern for the following year (the 2009-10 fiscal year) is that the referendum would expire without renewal," Leinen said.

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, according to Leinen. 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 "underfunding" of K-12 education during the 2008-09 fiscal year.

At the April work session, school district administrators will recommend several options to increase revenue, decrease expenses or do both to adjust the operating budget by $692,192 for the 2008-09 fiscal year.

The board then plans to make a final decision on the adjustments at its regular board meeting in April.