The Waconia School Board revisited its statutory operating debt (SOD) recovery plan at a finance committee meeting last Thursday, April 16.
The debt recovery plan outlines projections and assumptions around a number of variables in the financial management process intended to remove the district from a $6.4 million operating deficit.
As reported previously, the condition was first identified in 2019 driven largely by a shortcoming in state funding due to a change in the state’s special education funding formula. Under Minnesota statute, the school board must establish and maintain an operating plan that reflects progress toward reducing the school district’s deficit.
The board submitted a plan to the Minnesota Department of Education (DOE) at the end of January that could get the district out of debt by 2023. Two conditions of approval are that the district can’t further deficit spend and that it must provide a revised SOD plan to the DOE by the end of July with more firm dollar projections in terms of expected savings and revenues.
Some of the variables in the plan include student enrollment growth, future state funding and other revenues, staffing and other expenditures, the level of savings through attrition, and contingencies that could include budget cuts and/or potential new revenues through sources like another operating levy. Last Thursday’s meeting was focused on narrowing some assumptions around projected student enrollment, state funding formulas, and potential operating levy dollar figures that could be presented to district voters this fall.
Board members generally agreed to move forward conservatively with the numbers, such as projecting enrollment on order of 50 additional students per year, not the 100-plus student growth that the district had experienced until recently. The district has grown on average by about 25 students a year the past two years; however, given recent apartment and townhome building construction in the city and other recent housing development approvals, district officials expect a rebound in those growth numbers in upcoming school years. But the school board isn’t counting on them yet.
Board members also are proceeding with the SOD plan not anticipating significant increases in state general education or special education funding.
The board also asked district administrators to identify potential additional budget cuts that could be implemented this year without slashing into school programs – possibly on order of $200,000, on top of the approximately $1 million in spending cuts that were identified in 2019.
The school board meets again Thursday, April 23, to firm up the numbers and consider its next steps.