A proposed 2020 budget estimates growing deficits for the Anoka-Hennepin School District over the next two years.
The School Board heard the budget May 20, when Chief Financial Officer Michelle Vargas laid out expected deficits and a tentative time line for deciding on budget cuts or a referendum to increase revenues.
At the time of the meeting, the Minnesota Legislature had not yet approved a budget, so the proposed school district budget assumed of a 2% increase on the education funding formula each year. That turned out to be exactly what the Legislature approved during a May 24 special session that lasted overnight to May 25.
“I, too, am glad that we’re looking at two and two, but it’s still frustrating to know that districts are having to make cuts based on that, and for Anoka-Hennepin, we are going into this relatively healthy,” school board member Nicole Hayes said.
Without correction, the district’s unassigned fund balance would shrink below the district’s goal of 10 percent of expenditures by 2021.
The proposed budget outlines an increase in 2020 revenues to $517 million, but expenditures are expected to increase to $526 million.
The deficit, after being adjusted for “strategic investments” is expected to be almost $3.8 million in 2020. That grows to just under $5 million in 2021.
The unassigned fund balance is expected to drop to under $54 million, or 10.2 percent of expenditures, by the end of the 2020 fiscal year. By 2021 it could drop to 9 percent of expenditures if no action is taken, according to Vargas.
The general fund is anticipated to increase in revenue by just under 3%, or $13.5 million, in 2020 with an increase of $5.9 million coming from property tax on top of the state revenue.
General fund expenditures are anticipated to increase by almost 4%, or $19.7 million, in 2020. The single largest portion of the increase comes from about $10.5 million in added salary costs followed by just over $5 million in additional benefits.
The general fund is expected to have an operating deficit of almost $3.8 million, leaving the final balance at $137.6 million in 2020.
The district is expecting an increase of approximately $8.4 million in state aid in 2020, the majority coming from the 2% per-pupil formula increase agreed to by the Legislature. That includes an anticipated $3.75 million more in special education revenue and $2 million for long-term facilities maintenance in from the state in 2020.
A $2.6 million increase is expected for general education aid in 2020. The district should receive an additional $5.2 million from the formula increase, $1.3 million for additional students and about half a million dollars for pensions, but that is offset by a $4.4 million reduction on equalization aid on the referendum, according to Vargas.
If the board opts to cut back in the 2021 fiscal year, Vargas suggested setting goals by June. Then from July to December the district can work on cuts ahead of January 2020 public hearings, according to a tentative time line given at the meeting.
That would change if the board decided to ask for an operating referendum to increase revenue. In that case a resolution must be approved by Aug. 23 for voters to decide by Nov. 5, according to Vargas.
The proposed budget will be back in front of the board June 24 for adoption.