In school districts around Minnesota, superintendents and other school leaders often find this time of the year to be quite challenging, even without a pandemic. March and April are often a time to deal with budget adjustments. Unfortunately for many districts, this results in cuts to programs and staffing, which is a very difficult process.
If you have been following the last few board meetings, you may be aware that Bemidji Area Schools is facing the largest budget crisis in its history. A few years ago, we recognized that if state funding continued to lag behind inflation, we would need an operating referendum to boost the dwindling general fund of the school district. The district initiated a referendum effort with a relatively minor tax impact, but the question failed at the ballot.
Despite the failed referendum, we projected that we had two or three years before our budget would be depleted, but the pandemic had other plans for us. COVID-19 made a significant negative impact on our budget with serious costs for PPE, computer devices, protective barriers, and other safety measures. But those expenses were only half of the struggle.
The district lost 280 students during the pandemic which resulted in a loss of $2.8 million in revenue. The district also lost over $1.3 million in revenues due to changes in the structure of the Free and Reduced Lunch application process.
At one point, the district was facing nearly $9 million in unexpected costs and revenue losses combined. While federal dollars have helped mitigate some of those losses, the district has still been left with a $5.6 million budget deficit.
The pandemic made the perennial challenge of balancing the budget much more difficult. Prior to the pandemic, ISD 31 was struggling with the issue of a dwindling fund balance due to inequities in state formulas that have not been enough to keep the district solvent. Two of the district’s biggest challenges are special education funding and inadequate funding to bus students to and from school.
Special education is a prime example of what school administrators call an, “under-funded mandate.” Schools are mandated to provide special education, which is an important, but expensive framework of support services for many students. For ISD 31, this underfunding is responsible for roughly $6 million dollars per year of deficit spending.
Minnesota’s funding formula for transportation is not as serious a problem, but it still results in issues of equity between the metro area and rural districts like Bemidji. Because our rural district boundaries are so vast and sparsely populated, the inequitable formula forced ISD 31 to spend $800,000 more than it received last year.
Between the “perfect storm” of underfunding from the state, a failed referendum, and the pandemic, ISD 31 is experiencing the worst budget crisis in its history. This is why our school board meetings have recently been heavy on discussions about budgetary reductions.
Such cuts have included decreases in staffing, while another cut has resulted in vacating the ISD 31 Community Education offices and moving its staff to another building. Finally, our severe budget situation has led to the very difficult decision to close an elementary school, because ISD 31 can no longer afford to keep six K-3 elementary schools open in the face of such underfunding from the state.
As superintendent, I’ve struggled with these difficult choices. Nobody wants to make such cuts or closures, but when faced with dilemmas, strong leaders face issues head on and make difficult decisions to keep school districts solvent. As the leader of this district, it is my fervent hope that we will never again face such deficits. I continue to lobby for more support from the state, and we are considering another referendum this fall. I am hoping for positive results next time.
I am also hoping we will not experience a pandemic for another 100 years. By that time, I hope to be retired!
Tim Lutz is superintendent of Bemidji Area Schools. He can be reached via email at email@example.com.