District 88

budget cuts

appear to

decrease

Board discusses

difference between

projected spending,

board-approved cuts

By KREMENA TODOROVA

Journal Staff Writer

NEW ULM -- A difference between the amount of cuts approved by the District 88 Board of Education several weeks ago and the amount of reductions reflected in next year's budget draft presented by Business Manager Donna Luhring caused some board members to worry about dipping too far into the school district's reserve.

"There's a big discrepancy between what we thought we cut (in April and May) and what we actually appear to be saving," board member Sue Nierengarten said, while comparing the two sets of numbers during a work session Monday night.

"How much are staff reductions actually saving us?" she asked, more specifically, at another point.

Questions centered around the fact that the board authorized a total of approximately $855,000 worth of cuts to next year's budget in April and May. In contrast, as reflected in the budget draft under discussion, next year's projected spending of $22.1 million appears only roughly $563,000 smaller -- a difference of roughly $292,000 from earlier expectations .

A closer look at the budget draft shows that the amount officials are projecting to spend on salaries and benefits -- approximately $14.2 million -- is about $175,000 smaller than the amount in last year's budget. In contrast, when officials authorized staff reductions in April and May, they had expected to save approximately $430,000 from staff cuts -- a difference "for the worse" of about $255,000.

The numbers had Nierengarten worried that the board will be dipping deeper into the district's reserves than it had anticipated.

The way the budget draft stands, the deficit, or difference between revenues and expenditures, is projected at approximately $900,000 -- better, but not dramatically, than last year's budgeted deficit of roughly $1 million.

"We are already making a hefty incursion into our fund balance," noted Nierengarten." I am afraid we would be increasing that incursion."

When asked to explain the difference between current and earlier expectations, administrators pointed to several factors that may account for it -- without attaching specific dollar amounts to most.

Some of the difference is due to newly negotiated changes in employee contracts, noted Luhring, and at other points in the discussion, Superintendent Harold Remme and Curriculum Director Bill Sprung.

While the officials were unable to quantify the total dollar impact of the new contracts, according to earlier reports by negotiators, most settlements have translated into 3 to 4 percent increases in the district's costs for fiscal year 2005.

Another part of the difference, administrators said, is likely due to the way the impact of next year's staff cuts was calculated. The calculations were based on a $42,000 average contract -- whereas the actual contracts cut may have been less expensive.

The board had voted to cut the equivalent of 8.7 full-time contracts; it also voted later against replacing the district's technology director, for a reported another $64,000 in net savings.

One factor reflected in the budget draft, which officials did venture to quantify, was an increase of about $60,000 in next year's anticipated utility costs.

Remme noted that "between now and Thursday" (the date of the board's next meeting), administrators will try to present more definite answers to the board -- calculating the actual cost of contract settlements and savings from staff cuts and looking into other reasons for the numbers to look the way they do.

When asked about the current amount of the district's reserves (in particular, about what officials call unrestricted reserves, or money a school district can spend any way it wants), Luhring declined to speculate.

She cited an ongoing audit -- and the need for more time to factor in the actual impact on the reserves of the past year's mold removal projects (many of which were eventually funded with "health and safety", rather than reserve, funds).

At the end of the last fiscal year, however, as the district was projecting a deficit of roughly $700,000, Luhring had put the reserves at approximately $3 million; of that, roughly $2 million were unrestricted.