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|Paynesville Press - July 6, 2005|
School board passes budget for 2005-06 school year
For the second straight year, the Paynesville Area School District projects a deficit. In eight of the last nine years, the district's budget has been in the red. The district had a balanced budget in the 2003-04 school year, preceeded by six years of deficit budgets.|
The 2005-06 school year budget is unbalanced in part because the district does not yet know whether per pupil state aid will be increased. Education funding is in gridlock in the state legislature, which did not pass a budget in time to avoid a partial state government shutdown.
Without a decision by the state, the school board - which, by law, needed to pass a budget before the new fiscal year started on Friday, July 1 - approved a budget on Tuesday, June 28, that is $354,751 in the red. The budget, which can be revised, assumes that the state's per-pupil funding will be the same as for the 2004-05 school year. (Both the House and the Senate have approved funding increases for eduation - and the governor has supported increases as well - but the final K-12 education funding bill has not been passed .)
Over $100,000 of the district's projected deficit is due to a balance in its debt service fund. To pay for general obligation bonds, the district levies property taxes, and the money is held in the debt service fund until it is time for each payment. Since the district currently has a balance, the state is reducing the amount that can be levied in order to reduce the excess.
Money in debt service fund is solely for the payment of bonds, unless an exemption is passed by the state legislature. An act was introduced in the legislature this year that would allow the district to use its excess funds in its debt service fund for capital projects, but that bill has not passed.
When the deficit in the debt service fund is disregarded, the budget has a deficit of $252,934.
If no increase is included in the state budget, the district will need to cut expenditures, superintendent Todd Burlingame told the board at its meeting last week.
If the state budget provides a 2.5 percent or greater funding increase, an elementary school teacher would be added next year. This conditional staff position was approved by the school board in April.
With school officials keeping a short leash on new spending, inflation is the main cause of increases in general fund expenditures. Despite approximately $1.5 million in budget cuts over the past five years, the total budget is only about $300,000 less than five years ago. Budget cuts have served mainly to offset spending increases caused by inflation rather than to reduce overall expenditures.
This coming fiscal year is a good example; nearly $200,000 of cuts were approved by the board in April, yet the general fund expenditures in the new budget are $85,672 higher than budget projections for the past fiscal year, which ended on June 30.
Another financial item discussed last week by the school board was financing for a new boiler that is necessary for the middle/high school. A representative was on hand from the district's financial firm who offered five options for paying for the boiler, three of which would increase total district revenue and require voter approval.
One of these is a building bond, which is a general obligation bond issued by the district. The second, an increase in the current operating referendum, is based on a set revenue increase per pupil unit. A capital projects levy, the third option, would set an additional tax, with its rate and number of years specified before the levy was voted on.
A capital facilities bond, which is a general obligation bond that would not increase revenue and would mature within ten years, would not require voter approval, unless 15 percent of registered voters submitted a petition.
The last option presented, a lease-purchase, would involve paying a financing entity over a number of years, with the object of purchasing the boiler at minimal cost when the term of the lease ended.
Sealed bids are currently being accepted for the boiler replacement project, and the board will determine financing once the project's cost is known.
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