COVID-related funding and better-than-expected enrollment helped mitigate negative financial impacts of pandemic
[Editor’s Note: This is a second article in an ongoing series that takes an in-depth look at the pandemic and its affect on our community. The first, on the return of events, can be found at tinyurl.com/49eebrzt or in the June 3 issue of The Times.]
While schools across the state are bracing for a tough budget forecast as the effects of the financial stakes of the pandemic take hold, the Forest Lake Area School District has fared better than most, according to district administration.
Last year at this time, Forest Lake Area School District business director Larry Martini was concerned over what the school’s 2020-2021 fiscal year would look like. And at times over the last year, he said, it got tight and he was concerned, but federal funding and better-than-expected enrollment has helped mitigate what could have been a very different financial outcome.
Changes like social distancing requirements — leading to smaller class sizes, school breakfast and lunch programs — and cleaning requirements had a significant impact on the district’s budget since the pandemic first closed schools in March.
The district’s community education department was tasked with providing free child care for Tier 1 workers, which included medical personnel and grocery store workers. For the district’s 2019-2020 fiscal year, which runs July through June, community education took a $200,000 hit between mid-March and June, the majority of which occurred mid-March through May as the school year wrapped up. That requirement by the state continued through the next year any time schools were in distance learning, including hybrid learning. During the 2020-2021 school year, that number increased to $400,000, totaling $600,000 in just 15 1/2 months. Community Education is typically financially self-sustaining, and because of the deficit due to the child care costs or other costs in operating in the pandemic, the district will have to pull that money out of the general fund to cover the cost.
Typically $3 million is budgeted annually for food services across the district, which is roughly half spent toward staff and labor costs and the other half toward food costs. In March 2020, the governor ordered that free lunches be handed out. For the 2020-2021 school year, the district lost roughly $650,000, or 22%.
And in a year when proper cleaning measures were paramount for student and staff safety, the district paid out $400,000 for more supplies and staff to handle cleaning tasks.
“We had to buy other things we don’t normally have on hand,” Martini said, such as more disinfectants, specifically for viruses.
Developing Ranger Academy, an online-only option for students in the elementary grades, also was a big budget item necessary during the pandemic. Roughly 400 students enrolled in Ranger Academy, which the district dedicated 14 teachers for specifically. Eight of those teachers were new positions hired by the district, adding another $400,000 to the list of expenses attributed directly to the pandemic. This also helped keep class sizes to a standard necessary for the district to remain under the state guidelines.
“We were not to a point where we could lower 14 teachers out of classrooms to offset the need of Ranger Academy, so there were a number of additional staff members hired and to support lower class sizes so we could spread kids out, meet the distancing requirements in the classroom,” Superintendent Steve Massey said.
In total, the district took a roughly $2 million hit attributed to costs related to the pandemic.
“Most of the activities we undertook were a result of gubernatorial orders or guidelines from the Minnesota Departments of Health or Education. … Along with those directives, they said ‘We’re going to cover you. We’ve got funding coming.’”
Funding came through
As the costs added up and a second stimulus package was tied up in legislation on the federal level, there were some tense moments for the district.
“We knew roughly the amount of dollars coming in the first couple of months (of 2020). By the time summer hits, it’s ‘We’re going to be short, and we need the feds to do something more,” Martini said.
But Massey and Martini said those payments came just in time. Over two separate stimulus programs, the district received $2 million in funding, which Martini said covered the majority of their losses, and a third stimulus is expected to be coming earmarked for summer programming.
“The dollars, fortunately, came at the right time, so we weren’t going into deficit spending, and we weren’t going into our fund balance,” Massey said, adding “We were terrified at moments” but the costs for things like protective equipment for staff and students, providing hot spots for families who don’t have internet connectivity, or Ranger Academy programming were well timed.
The district is anticipating that all of the $650,000 lost for food services will be recouped by federal dollars, though “it’s all one-time and it’s all earmarked; we’re hoping we can put all of that $650,000 of those federal funds towards that deficit,” Martini said. He also said that the district did get some waivers from the state of Minnesota, which also helped that deficit.
But those dollars have expectations and tight turnaround timelines attached to them, and that’s what has made some of the implementation a little difficult. Massey was told in mid-May that funding would be coming for summer school, and instead of several months of planning, now he had less than one.
There are two other factors that have helped lessen the negative impact on the district’s finances this year. Massey and Martini both agree that the approval of the levy in 2018 has helped the district significantly in an unstable year.
“We would’ve been in a really, really tough spot,” Massey said. “It gave us financial stability, lowered class size, and allowed us to really build and support the operation. We’ve got that backbone to do that work.”
In addition, the district had a better-than-anticipated enrollment year, which plays a significant factor in the amount of state funding the school receives. Each year the district anticipates a 100 student decline, due to several different factors.
“The rate of growth of school-age kids is really on a steady decline throughout the state, and across the nation, and certainly in Forest Lake,” Massey said. Other factors of declining enrollment include alternative schooling.
In a year when more parents across the state chose to withhold their kids from entering kindergarten or choosing alternative schooling options for their children during the pandemic, Massey and Martini had initially expected to see the number of student decline increase over 100. Instead, the district saw more students in their schools than expected and only had a decrease of 60 students compared to the over 100 they had anticipated.
“We were gaining enrollment as what we thought would be a loss,” Massey said. He attributed it to the concerted effort to remain in-person compared to other school districts.
“We logged more in-person learning days than many other districts across the state,” he said.
Estimated enrollment for the kindergarten class isn’t usually expected until August, so Massey said he won’t know if this will continue, but he said the dollars earned from this year’s extra enrollment previously not budgeted for will allow for long-term planning.
“We don’t go ahead and spend the $7,000-plus because next year we might not (have that). It becomes a bit more of a financial foundation underneath our operation, but it’s more of a long-term projection,” Massey said.
The state Legislature has reconvened in a special session. School funding is yet again on the table of discussion, and Massey said that while the funding during the pandemic was one thing, “The state legislative work around school funding is a different conversation.”
He said that more long-term funding is imperative, especially with the surplus expected.
“If we get less than 2% movement, and special education funding, we’re going backwards as a school district. Those are minimum numbers,” Massey said.
He added the district is planning for a fully in-person and unmasked school year next year.