District 196 Plans to Use Fund Balance for 2011-12 Budget, Awaits State Budget Outcome

The Rosemount-Apple Valley-Eagan school district board began reviewing the district’s preliminary 2011-12 budget on Monday, but the district is still unsure what it’s working with in terms of state funding because the state hasn’t passed its budget.

Right now, the district is planning for a 3.5-percent state aid cut, Director of Finance and Operations Jeff Solomon said. Projected general fund expenses exceed revenue by about $6.8 million, which the district plans to fill with money from its fund balance, he said.

The most recent Republican proposal at the state level for K-12 funding increased funding by about $80 million, coming closer to what Gov. Mark Dayton proposed in February.

Solomon said while this change could play a role in the district’s budget, the increases in Dayton’s February proposal focused on things like early childhood and all-day kindergarten programs; otherwise, the proposal included no cuts to K-12 education, but no state aid increases either.

Solomon said, however, that there are “no real surprises in the preliminary budget;” The district had expected to spend fund balance when looking at its five-year budget plan.

The preliminary budget projects about $285.2 million in revenue for 2011-12, and about $292 million in expenses. The general account, which represents the largest part of that general fund at $201.8 million in expenses, actually shows that its revenues should exceed expenses by about $19.4 million; other funds provide for the overall deficit.

Expenses and revenue for 2011-12 are projected to be less than the final amounts for 2010-11, at $10.1 million less and $6 million less, respectively.

Projections for fund balance show the district will begin the next fiscal year with a fund balance of $32.13 million, which will then be reduced to about $25.3 million, or 8.66 percent of expenses, by year’s end.

The board approved its budget adjustments for 2011-12—using about $5 million in one-time federal money and making about $3.5 million in cuts—in March.

The preliminary budget includes cuts in the form of staff reductions—27 full-time equivalent teaching positions and nine FTE administrative and support-staff positions—many of which were eliminated by a restructuring of the district’s middle school format.

Solomon said the district will have to approve a preliminary budget before the end of the fiscal year—June 30—so it can continue to have a budget to operate from, regardless of whether the state budget is approved or whether the government shuts down.

A potential government shutdown shouldn’t affect the district much, Solomon said, but one thing he questioned was how it would affect setting the school district tax levy. The state usually calculates the levy limits during the summer, he said; while the district certified its levy for 2011-12 in December, he doesn’t know what would happen with the levy for the following year if the state government wasn’t able to calculate levy limits on its usual schedule.