District 191 says challenges lie ahead

COVID-19 has added new layers of financial uncertainty for Burnsville-Eagan-Savage and the rest of Minnesota’s school districts.

The District 191 School Board, fresh off solving an $8.5 million deficit for next school year, heard a report May 14 on how the pandemic could further scramble district finances.

The district has lost some revenue streams and added some expenses, such as fulfilling Gov. Tim Walz’s executive order requiring schools to provide free child care for elementary-age children of health care workers and first responders while schools are shut down.

State funding prospects for schools in the next few years appear bleak, according to the district, which says years of inadequate funding increases along with revenue losses from declining enrollment have caused repeated shortfalls.

The district’s 2020-21 budget-balancing plan includes savings from closing three schools, new revenue from a voter-approved levy, staff downsizing based on enrollment and a one-student increase in class sizes, which will also claim teaching positions.

It’s too early to predict all the impacts of COVID-19, but more “challenging conversations” may lie ahead, Board Member Eric Miller said.

“This board has become accustomed to having some tough discussions, challenging discussions, around challenging finances,” Board Chair Abigail Alt said. “Together we have weathered the storm. I think looking ahead again at all of the unknowns, it may well come to be that we find ourselves in that same situation as a result of COVID come fall.”

Officials are “crossing our fingers” the Legislature won’t reduce the state’s budgeted 2 percent school funding increase for 2020-21, said Lisa Rider, director of business services.

Ominously, the district predicts no increases for 2021-22 and 2022-23. Most districts share that view, Rider said.

The Legislature may shift part of next year’s funding into the following year, leaving a cash-flow hole that would cause the district to incur short-term borrowing costs, Rider said.

For the current year, impacts from COVID-19 could leave the community services and food services funds a combined $1.4 million to $2.5 million in the red, a district report said.

Community Education has canceled all classes and activities. Lost revenue will cost the community services about $1 million.

The child care costs come out of the fund, pushing its deficit to a possible $1.5 million by the end of June.

A “significant transfer from the general fund” will probably be needed, said a district report.

The staff costs of transporting and delivering free curbside meals safely to numerous sites throughout the district are estimated at $400,000 to $1 million. It’s unclear, under the federal summer food program, whether the district can charge the costs to its food service fund or must dip into the general fund, Rider said. Awaiting federal guidance, the district is advocating for using the food service fund, she said.

In the general fund, fees and donations are $645,000 below budget, a district report said. But there are potential savings: $300,000 from not using substitute teachers, $500,000 from unspent funds in the prior year and $100,000 in lower utility costs.

The federal CARES Act included $3 billion for financial relief to schools, Superintendent Theresa Battle said.

“We do know there are federal funds coming our way,” Rider said. “What we don’t know is what our allocation will be.”

The district is committed to holding summer school this year, Rider said. But under the hybrid program of distance learning and in-school instruction allowed by a new executive order, the funding mechanisms are unclear, she said.

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