BEMIDJI -- The Bemidji Area Schools Board of Education celebrated the start of summer Monday night in everyone’s favorite way -- digesting pages and pages of budget projections.
Monday, June 21, marked the board's first meeting since the end of the rocky 2020-2021 school year, with board members sitting closer together and wearing no masks for the first time in months.
The evening’s major topics included results of a community survey sent to Bemidjians in May to gauge their support for another referendum, budget projections, federal relief funding analysis, school handbook approval and activity director reports. Despite the hefty agenda, little action was taken, many of the agenda items were purely informational.
District Business Director Krissy Fenner seemed in her element Monday night. She presented the board with a new comprehensive budget book ahead of the adoption of the preliminary operating budget for 2021-2022. Many board members expressed appreciation for how clearly the document was formatted.
“The budget book is new this year to our district and I'm very excited to present it to you. It's a lot of information. My team in the business office has worked very hard to pull this data together and build this budget book. So bear with me, it’s lengthy. It's a lot of information, but it's important information,” she said.
School boards have to approve a preliminary budget by July 1 each year. Bemidji Area Schools operates a fiscal year from July 1 to June 30, so the preliminary budget is presented for approval to the Bemidji school board each June.
Fenner explained that a school district’s budget consists of categories called funds. Each fund maintains its own separate revenues, expenses and fund balances.
The general fund (Fund 01) is the most important for the operation of the school district. About 900 employees and nearly 4,700 students are educated in the district's 14 schools by using the general fund, Fenner explained. Other funds are restricted for certain uses, such as only for construction or food service.
“Over the years the school district has seen a pattern of deficit spending, requiring the use of fund balance as a means to fill the gap between recurring revenues and expenses, and then making reductions to balance the budget,” Fenner said. “The school district sought voter approval of additional funding through a local operating levy, which failed in November 2020. This coupled with the loss of enrollment due to COVID-19, resulted in a $5.6 million dollar reduction target in order to balance the budget and avoid statutory operating debt.”
Fenner said the district has identified nearly $4 million in reductions for the upcoming school year. The district will use Federal ESSER II funds in the 2022 fiscal year to make up the difference between the reduction target and actual reductions made.
“Going forward, the district will need to see an increase in revenue, continue to make reductions, or both in order to balance the budget each year,” she said. “The school district would need to grow its fund balance by nearly $10 million in order to reach a level comparable to the state average of over 20% of annual expenses. The school district would need to grow its fund balance by nearly $4 million to reach the board policy of 10% of annual expenses. So, we have some work to do.”
According to the fund balance policy calculation, for the revised budget FY 2022, the operating fund balance will be $2,204,150, compared to a total operation general fund expenses of $60,682,907. This means the fund balance will be 3.63% of annual operating expenses. The district policy is to keep it at 10%, and statewide averages are around 20%.
Statutory operating debt kicks in if the district’s fund balance is less than 2.5% of annual expenses.
Fenner also addressed the board regarding federal funding received by the district in the wake of the pandemic. While federal funding is a welcome relief, Fenner warned it is merely a bandaid.
“This funding buys us the time needed to answer the unknowns around fall enrollment, future state and local funding and the needs of our district as we continue to address our systemic budgetary imbalance,” she said. “We must continue to strive to balance our budget or we will find ourselves on the edge of a fiscal cliff once this federal funding is gone.”
In total, Bemidji schools received federal funding on three separate occasions stemming from three congressional acts. In March 2020 came $1.1 million and $1.4 million from the CARES Act. In December 2020, came $5.1 million of ESSER II funding. Most recently, came $11.6 million of ESSER III funding. 20% of this must be used to address learning loss and 80% is meant to address long-term school reform stemming from lessons learned during the pandemic.
There is currently a steering committee underway to determine how and where to spend the remaining ESSER III funds.
Bill Foster of School Perceptions, an organization that works with school districts to conduct surveys, presented findings to the board from the survey sent to school district residents in early May.
The survey was distributed with the hope of informing the public on the districts’ financial issues, gauging voters’ feelings toward another referendum, and collecting guidance on areas to spare or cut.
Last November, the board put a referendum to a vote and heard a resounding “no” back -- around 60% of voters refused the ballot measure, with the question receiving 11,725 “no” votes and 7,851 “yes” votes.
Foster reported that 3,193 people responded to the survey, representing 18% of the district's voters.
Respondents were asked what areas the board should and shouldn't consider to help solve the budget crisis, and they suggested delaying purchases of new buses, delaying curriculum updates, and charging students high participation fees. According to respondents, increasing class sizes and reducing support staff are the least desirable options.
In the surveys, respondents were asked which, if any, ballot measures they would support. The options were a $560 per pupil levy, which if passed would allow the district to reinstate some of the cuts made this year, a $460 per pupil levy, which if passed would allow the district to maintain the status quo, and a $360 per pupil levy, which if passed, would require the district to continue making reductions each year.
Foster said, due to the responses, a $560 per pupil levy would be unlikely to pass, but a $460 per pupil levy could be viable.
Since the board members were only seeing the findings for the first time Monday night, the board did not take any action.
Board Chair Ann Long Voelkner said the board would return to School Perceptions with more questions after receiving paper copies of the results.
Bemidji Area Schools Superintendent Tim Lutz sounded optimistic as he gave the board a routine COVID-19 update.
“These COVID updates are becoming a bit shorter, as the news gets better and better,” Lutz said. “The good news is that the MDH two-week rolling average, which is a couple of weeks behind the county, is down to 7.16 as of last Thursday -- really encouraging. That's the first time we've been in single digits for the better part of a year. Our Beltrami County numbers came out last Friday at 5.21.”
Back in the summer of 2020, Gov. Tim Walz had set below nine as the parameter for full in-person learning, therefore the district sitting at a rolling average between seven and five is encouraging.
Lutz laid out the precautions currently in place for summer school. Unvaccinated people -- students and staff -- are strongly recommended to wear masks while in school, though since the school cannot inquire about vaccination status, it is on the honor system. In some specific scenarios, like on school buses or in childcare settings, masks are still required for everyone, due to state guidelines.
Later in the evening, he spoke about returning to school in the fall and said if recommendations remain constant, it would likely look similar to school this summer.
“The pandemic numbers are going down, which is encouraging, but it still does continue to affect our daily lives and change the way we conduct our work, and our process of educating students,” he said.
He explained that last year the district leadership team worked with stakeholders and listened to the advice of health care professionals to develop a plan to provide a high-quality education for students in a safety enhanced learning environment.
“Based on guidance from federal, state and local health officials, and considering input from stakeholders,” Lutz continued. “We have now been working on a safe learning plan for the start of next year, which will be basically similar to what we're doing this summer, carrying into the next school year.”