BEMIDJI -- Bemidji Area Schools took a look on Monday at its finances for both the recent past and the near future.
In addition to looking at the five-year projections, the Bemidji School Board also heard a presentation from Jon Roscoe of Miller-McDonald regarding the audit of the district for the 2018-19 year. Among other items, Roscoe pointed out that the district’s fund balance was lower than it ideally should be. The fund balance is essentially the district's reserve tank.
Roscoe said that fund had 1.6 months' worth of operations in it. He then added that the school district shouldn’t get the fund below one month’s worth of finances. Ideally, he said, it should have two to five months' worth of funding available.
Chris Leinen, director of business services for the district, said the decrease is due, at least in part, to the establishment of Gene Dillon and the process of moving into that facility. The decrease in the fund balance was roughly $1.4 million.
“We did anticipate an operating deficit this year because we were in transition moving into the Gene Dillon Elementary School. We could not be 100 percent sure we were going to have that school available to us, and so we had to retain additional space,” Leinen said.
The district expected $1 million of that decrease in the fund balance. Leinen said the other $400,000 could be described as “normal fluctuation” in a $65 million budget.
The projection for the next few years is that there will continue to be a negative variance in the budget, meaning expenditures are expected to be higher than revenues. While the negative variance for last year was $1.4 million, the projected negative variance for the current year is $494,000. That negative variance is expected to be even larger the year after that, Leinen added.
Student enrollment is the main driver behind the school's funding. And, even though enrollment is projected to remain flat for the near future, inflation has caused a gap between the amount of funding the district will have and the amount of funding it will need.
“The reason for this growth is my conservative assumption on new revenue is less than my assumption on inflation; it’s really that simple,” Leinen said.
Leinen said they likely will have to make a "target reduction" this spring of nearly $500,000.
Prior to the main School Board meeting, a steering committee met for the first time to discuss the possibility of putting an operating referendum before the voters in the district. Leinen said those projected numbers are something the sub-committee is going to have to take into consideration while deciding how much to ask for from the voters.
Leinen, however, said the steering committee making decisions on the potential referendum may need to make a goal of bringing in roughly $1.6 million worth of new revenue.
"These are the pieces of the equation that the referendum committee will need to discuss and evaluate... but this is my baseline recommendation moving forward for the future," Leinen said. "This doesn't mean there's going to be new money for new programs; what it means is we're going to try to cover inflation with new money."