The St. Louis Park School Board approved a budget that relies heavily on using reserves but anticipates future budget cuts.
The budget, which the board approved unanimously June 22, anticipates spending down part of the district’s reserves in the new fiscal year. It projects revenue of slightly more than $68.8 million in the general fund but expenses of nearly $72.4 million – a difference of about $3.5 million. To help pay for it, the district’s general fund reserves would drop about $2.6 million, from $11.7 million to $9.1 million.
The fund balance for all district funds would decrease dramatically, but most of the change relates to district facilities upgrades. Overall, the district expects to bring in about $91.2 million in revenue and have expenses of about $136 million, a difference of $44.8 million. Of that, about $41.4 million is related to a building construction fund.
After the shift, the district would have a fund balance of about $16.4 million overall.
The budget sets aside $200,000 to address class size or other staffing concerns given unknowns about how schools will operate this fall. The budget also includes $500,000 for costs that may result from start time changes.
A letter from the district’s business office states that as the district enters the new fiscal year, “the cabinet and leadership team have agreed that we will pursue aggressive cost containment measures” that will be developed this summer. The document says, “In light of COVID-19, there may be multiple budget updates” during the fiscal year.
The budget includes increases in transportation costs and an 85% increase in property and liability insurance costs, said Director of Business Services Patricia Magnuson. That amounts to a $311,000 increase from a draft version of the budget.
“It’s linked to some unsettled feelings in the insurance marketplace that because of all of the things happening with COVID and other issues happening in the world that there might be increased property and liability costs for insured parties,” Magnuson said.
The budget did not factor in other potential pandemic-related impacts during the next school year. Those impacts could include reduced enrollment, reduced state aid or uncollected taxes, Magnuson said.
“I don’t think anything on that list is implausible,” she said.
Such impacts could further impact the district’s fund balance, she indicated.
“I want to make sure that we’re very transparent with our community and with our board that we know these things are possible,” Magnuson said. “We didn’t try to guess which ones could occur and build it into the budget. But I wanted everyone to be very well aware that we still have a sufficient fund balance to meet board policy and to meet our payrolls and to meet any unexpected needs so that we don’t have to rush into making decisions.”
Cuts that end up not being necessary in the future could impact racial equity, she indicated.
“We might cut things that seemed like the right thing to do, but knee-jerk reactions are often parts of structures that have racist outcomes,” she said.
Later she cautioned, “We will be containing costs this fall as we enter school, no matter which way we look at it.”
Budget cuts will be necessary for the next budget year, she predicted.
The district is experiencing energy savings from maintenance projects that have been undertaken and a self-funded medical program that will help the district contain costs, Magnuson said.
Boardmember Anne Casey indicated that she believes using reserves is the right call.
She said, “That is what it’s for – we are in an emergency.”
The budget anticipates that the fund balance would still be above the minimum level the board has set, Casey said.
“That just demonstrates the fiscal responsibility that boards before us have had and that Patricia is really enabling us to keep now on this current board,” she said.
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