Prior Lake-Savage Area Schools to end fiscal year with $1.6M deficit

Prior Lake American

Prior Lake-Savage Area Schools will dip into its general fund balance by nearly $1.6 million when fiscal year 2018 ends on June 30.

During a final budget review in December 2017, the budget showed additional revenues of nearly $1.9 million. However, there were also additional expenditures of nearly $3 million.

"There were quite a few things going on. There really isn't any one thing I can point to to say 'That's why we're over budget,' or 'This is why we're over budget,'" Business Services Executive Director Julie Cink said. "School finance is really complicated."

The additional expenditures included:

• More than $206,000 in staffing since July 2017

• More than $521,000 in increased federal funding and Title 1 carryover

• Nearly $350,000 in site and department carryover from 2016-17

• More than $471,000 from staff development and curriculum carryover

• About $195,000 from district-wide operating capital carryover

• About $116,000 in third-party billing

• More than $248,000 in special funding

• More than $204,000 for increased programming and staff at MNCAPS

• More than $156,000 in substitute teacher costs

• Exactly $100,000 for solar gardens

• More than $306,000 for salary and wage adjustments

• More than $75,000 for the quality compensation program

"Some years we have higher expenditures for different things," Cink said. "We have some bigger expenditures that we know we're going to spend. That's kind of how it works with the budget. I think we are following through on what we told taxpayers we are doing."

The nearly $1.6 million needed will come from the general fund balance, which would then sit at nearly $14 million, or about 13 percent of the district's total expenditures. The district has a policy to keep the balance at anywhere from 8 to 12 percent.

"Even though we are deficit spending, the board knew we could spend down to be in our fund balance policy," Cink said. "There's a really fine line, because our job is to educate students — so, we want as much money in our classrooms as we can get."

Though voters in the Prior Lake-Savage Area School District approved a $109.3 million bond referendum in November 2017, those funds are only used for buildings.

For 2019, the district is planning on being more than $400,000 in the black, $863,000 in the red for 2020, $622,000 in the red for 2021, $166,000 in the black for 2022 and then nearly $800,000 in the black for 2023.

"If those assumptions come true, we should still have a 10 percent fund balance five years from now," Cink said.

Cink said most of the additional expenditures were due to funding from the state not matching what schools need, which she said is a problem for pretty much every district in the state.

Shakopee schools will face a $2.6 million budget shortfall, Burnsville-Eagan-Savage will face a $6 million shortfall and Jordan Public Schools has a $348,000 deficit. Gov. Mark Dayton has proposed emergency funding for schools as well as additional special education funding.

Special education funding is a huge issue, Cink said.

"(The state) only funds you a portion of your total funding for special education," she said. "What you can't fund has to come from the money you get for educating all students. If nothing else changes, that's going to impact a lot of our budget, especially when our special ed costs are over $16 million."

According to Schools for Equity in Education, the basic formula allowance for state funding is anywhere from $1,256 to $2,514 lower per pupil than what factoring in inflation would call for.

Cink said Prior Lake-Savage Area Schools is able to maintain its budget due to the amount of growth in the district. The district is expected to grow from 8,746 students in 2018-19 to 9,919 students in 2022-23.

"So much hinges on what happens on the state level for school districts because 70 percent of our revenue comes from the state," Cink said. "When that money is stagnant and doesn't grow, school districts are forced to do something. That's just the reality of it."

Cink said projections show that growth continuing for 12-15 years at least.

"We're a growing school district and when you're a growing school district, you get more money because you have more students," Cink said.

The Prior Lake-Savage Area School Board approved the 2017-18 budget in December 2017.

"I think our district has a really long, positive history of handling our finances," Cink said. "The last time this district made any budget cuts was in 2010. We have a long history of a very well-managed budget in Prior Lake-Savage Schools — it takes everyone in this district to do it."

Reporter Andrew Hazzard contributed to this report.