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Paynesville Press - November 14, 2001

Levy failure means more budget cuts

By Michael Jacobson

The defeat of the proposed levy referendum left the school board discussing its meager options last week: make major budget cuts for the second year in a row or try again to pass a levy to raise more money.

It soon opted to try the levy again.

Two days later after Tuesday's levy was defeated by 200 votes, the board held an emergency meeting on Thursday afternoon and unanimously approved an identical levy referendum for Thursday, Dec. 27.

But the state acted quickly, too. District #741 needed approval from the Department of Children, Families, and Learning (CFL) - the state department that oversees education - to conduct this second-chance levy. Superintendent Howard Caldwell got a negative reaction to a second referendum on Thursday when he called CFL about the board's action, and the state department faxed a denial to the district on Friday.

Gov. Jesse Ventura attacked two districts that tried to repeat levy referendums - presumably Paynesville and another district - on his weekly radio show on Friday.

The only reason District #741 could have tried another levy is because it is in statutory operating debt, which frees districts from the once a year limit for excess levy referendums. Because of its statutory operating debt status, the district must submit a plan to the state by the end of January on how it will solve its general fund deficit.

Without state approval, the district has no chance to hold another vote. The district has spoken to its local legislators who will do what they can to change the CFL decision, said Caldwell, who estimated the district's chances of having another levy referendum in December at less than one-tenth of one percent.

The district also looked at its legal options, but decided it had neither time nor the money to pursue legal action to get another referendum, said Caldwell.

Caldwell said the state told him they would consider allowing the district to hold another levy referendum in the spring, which means that the money, if the levy is approved, would not reach the district until the 2003-04 school year.

Without the $475,000 that the levy would generate next year, the only option for the district is more budget cuts. Trying to better educate the public and voting again would "be a lot better than going through the cut process again," said board chairman Pat Flanders last week.

The emergency meeting was held on Thursday because the district faced time constraints to set up the levy referendum again before the end of the year. A levy would need to be approved before the end of December for it to be applied to property taxes in 2002. Only then would the district receive the money in the 2002-03 school year, when it needs it.

The board needed to approve the levy referendum 49 days before it could take place, meaning the board had to take action last week.

The failure of the levy referendum was the first defeat for the school district in an election since voters rejected a bond issue for a new middle school in 1987 by a three-to-one margin. Since then, district voters have approved two building projects (the middle school/elementary school project in 1990 and the auditorium/fitness center in 1999) and three levy referendums: in 1988, 1993, and 1997.

The board discussed the defeat of the levy while waiting for the final tabulation of votes on Tuesday night. The board held a six-minute meeting around 11:30 p.m. to canvas the election results.

Board members talked about the confusion they sensed among the voting public on the levy issue, which they felt caused its defeat. "We need it," said board member Fern Roberg, who did not seek re-election this fall. "Didn't we get our message across?"

Anyone confused about the levy probably voted no, the board surmised. "It was evident that they didn't read the newspaper or our literature because they were here at 8 a.m. this morning," said board member Maurice Dosdall on Tuesday night. The polls didn't open until noon.

Some people didn't know that a school board election would be held in addition to the levy referendum, added Caldwell. "They came for one vote no," he said.

The confusion also was caused by the lack of certainty when it came to the tax impact of the levy. But the district's financial advisor and the county auditor's ability to predict the impact was hindered this year by the major changes of property tax reform and the uncertainty of its effect on other local taxes (city, county, and township).

The confusion was also fueled by Gov. Ventura's last-minute opposition to school levies, said Flanders. "He asked us to do levies. Not with his action but with his lipservice (to education). He doesn't give a damn about education," said Flanders.

The board also was confused by the election results, in that the levy failed but all four school board members that were elected supported it. "It underscores the confusion that's out there," said Flanders.

List of cuts
"When we sat for the budget cuts (last winter), they said, 'Don't cut. Pass a levy.' Where are those people now?" wondered board member Dan Andersen, who also did not seek re-election this fall.

The school board intended to make it clearer during a second levy referendum what the money would buy at school. Since the only alternative is major budget cuts, the board directed the administration on Thursday to get started on a list of prospective cuts. Last year, the administration came up with nearly $700,000 worth of potential reductions, and the board eventually cut over $500,000 from its budget for this school year.

Flanders said he didn't want to have to list the potential cuts in order to pass a levy, calling it loaded-gun-to-the-head tactics.

Now, with no additional funds coming from raising the district's levy, the only way for the district to balance its finances is through budget cuts. Exactly how much will need to be cut hasn't been determined yet, but Caldwell thinks the district will have to look in the half-million-dollar range again.

The district also needs to cut at least $150,000 just to compensate for declining enrollment, said Caldwell.

Several board members - Flanders, Andersen, and Deb Glenz - questioned board member Bob See about how he would solve the district's financial woes without the proposed levy. See stated in the Press before the referendum that he had concerns about the timing of the levy and felt, if it failed, some cuts would be rather painless.

But the other board members felt that his ideas of cutting PrimeTime and having teachers teach an extra class per day instead of having duty periods would not amount to significant savings, even if they could be accomplished. "Blowing smoke," Flanders called See's ideas.

Flanders proposed looking at larger budget areas to cut completely, rather than try to amass a large sum by adding up a number of smaller items from throughout the school operation. "The $5,000, $10,000, and $15,000 items aren't going to cut it," he said. "I don't want to get into it. We need some big number items to whack."

He suggested transportation as a big expense item that could be considered for elimination. The district spent $490,000 on transportation last year (the 2000-01 school year).

"Can you imagine the fallout if we cut transportation?" said Glenz, who was re-elected last week to serve four more years on the board.

Some school districts - mainly in the metro area - have cut busing, said Caldwell. If the district did not provide transportation, parents would have to provide transportation themselves or contract individually with the bus company.

"I want to provide transportation, don't get me wrong," said Flanders. "But the voters have said tighten the belt."

The effect of such a cut - or any large-scale measure - would not only be detrimental to the quality of education here, but might increase the problem of declining enrollment. If District #741 decreases services, more students might choose to open enroll in other school districts, leading to further revenue losses, further financial crisis, and the need for additional budget cuts in the future.

Right now, about 100 students choose to open enroll in Paynesville, and the district loses only 45 to other districts, meaning a net gain of 55 students. This translates into a monetary gain for the district, which is paid based on its enrollment through the state's per-pupil funding formulas.

Only See seemed to be unconcerned with the prospect of more cuts. He said schools had created their financial predicaments by constantly adding services - like nurses, meals, and transportation - and getting away from basic education.

Other board members thought that modern schools can't offer just the basics because schools in the next town will offer more services. "I think you're living in the last century," said Flanders of See's back-to-the-basics idea.

On Thursday, See voted with the rest of the board to put the levy to a vote again.

To avoid making large-scale cuts, the school district would need a small miracle to have another referendum in December. Then it would need to reverse the outcome of the levy vote in six weeks.

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