Harder times coming for District 88

Officials anticipate

more painful choices

By KREMENA TODOROVA

Journal Staff Writer

NEW ULM -- More painful decisions are looming for the local public school system because of drops in enrollment, the resulting loss of state funding and the depletion of local reserves, school administrators warn.

In the past couple of years, the school district chose to offset negative funding trends by spending down its reserves, shifting funds among programs, seeking excess tax levies and hoping that legislators would solve the problem, says District 88 Superintendent Harold Remme.

Following this approach, it has managed to keep class sizes low and minimize program impacts.

Now, it's a new budget ball game, Remme warns.

Balancing the budget has been delayed long enough; it is time to match revenues and expenditures, he says.

According to Business Manager Donna Luhring, having spent its general fund balance down from roughly $3.3 million at the end of the fiscal year 2003 to about $2.2 million at the end of 2004, the school district is now projected to end the fiscal year 2005 with about $1.1 million in reserves.

(The general fund budget is, roughly speaking, in the $20 million range.)

With revenues projected to fall further next year, even if the district plans for no spending increases other than the seniority raises built in employee contracts, it would not only spend all its reserves, but would also end up more than $100,000 in the red, Luhring says.

Officials note that it is not realistic to limit expectations of spending hikes to seniority raises. Even if no inflation adjustments are granted to employees and salaries are frozen at current levels -- a move school board members have decried as a morale buster -- hikes can be expected for health insurance, utilities, bus fuel and supplies, to name just a few.

Cautioning that her calculations are based on early and occasionally partial data, Luhring has quantified some of the problem's sources.

For example, she anticipates that next year the district will lose roughly $740,000 in state funds. Of this, a notable chunk of roughly $590,000 is directly linked to lower enrollment; another sizeable $118,000 is expected to be lost because enrollment drops in private schools call for smaller amounts of aid for providing transportation to private school students.

The nature of the enrollment declines precludes an equivalent reduction in spending, officials warn. Because enrollment declines are spread across the board, the district cannot always simply cut class sections. As to the non-public transportation aid, officials explain that the district still needs to run the same buses -- just not as full.

Funding is also slated to go down from smaller sources such as tuition, fees, admissions and interest earnings, Luhring estimates.

(In spite of the cuts in funding, because of a nearly $1.2 infusion of cash generated by bonds for mold removal projects, next year will see a net increase in revenue, of $378,000, Luhring notes.)

On the Board of Education's request, District 88 Curriculum and Personnel Director Bill Sprung has started an exercise in calculating how much the district could potentially save by increasing class sizes across the grades.

(Sprung cautions that this is just one piece of the puzzle, with the impact of cuts in administration, course offerings, or even larger pieces of programming like all-day every-day kindergarten, still remaining to be looked at.)

In one example, Sprung's calculations show that by increasing class sizes at the High School from the current average of 21 students (which ranges from 8 in band to 25-plus in Spanish) to an average of 23 students, the district could save between $260,000 and $300,000 depending on teacher pay.

Alternately, if classes were to average 25 students (with some classes of 27), savings would range between $400,000 and $450,000, roughly.

Such an approach would lead to scheduling, course availability and other complexities, officials note.

Remme urges the board to "set the price we are willing to pay" -- establish a list of priorities , set a price for each priority and purchase what matters most to students, staff, parents and community.