Q: What is the annual budget for the school district?
A: In fiscal year 2019-2020, the total budget for all district funds is $172,110,078. This includes: the general fund, school nutrition, community services, construction, debt services, internal services and fiduciary. The general fund is the largest portion of the annual budget at $125,649,242. The general fund accounts for educational activities, district instructional & support programs, district and school administration, operations & maintenance, transportation and other legal expenditures not accounted for elsewhere. The 2019 Referendum asked for an operating levy increase of $550 per student to continue help manage budget shortfalls in the general fund moving forward. The operating levy request was not approved by voters.
Q: Why do we have such an urgent need to make budget cuts?
A: For years, state funding has not kept pace with inflation or increasing costs, and does not close the funding gap for our special education services. School district leaders have done a good job of keeping expenses down while cutting the budget by $3.5 million over the past three years, but given these additional pressures on the district’s operating budget – and without additional revenue from the failed operating levy – more cuts are now necessary to keep our fund balance above 5%.
Q: What measures has the district taken to contain costs in the past?
A: We have worked hard to do responsible budget planning with staff and the School Board. Budget cuts totaling nearly $10 million have been made in the last decade – including $3.5 million in the last three years alone. However, expenses continue to outpace revenue and strain our operating budget. The district spends $7.4 million dollars annually out of the general budget to cover unfunded mandates that are not fully reimbursed from state or federal sources for special education services. This is exacerbated by state funding that has not kept pace with inflation for several years. If state funding had kept pace with inflation since 2003, we would have received more than $6 million in additional funding this year alone. Looking ahead, expenses will exceed revenue by approximately $9 million over the next two years based on current assumptions and projected enrollment growth.
Q: What is a “fund balance” and why can’t the School Board decide to use dollars from the fund balance to help manage the budget shortfalls?
A: A district’s fund balance is an important aspect in considering the district’s financial well being. A healthy unassigned fund balance provides for things such as cash flow, as a cushion against unanticipated expenditures, enrollment changes, funding deficiencies and aid proration at the state level.
In the past and in the current school year, the School Board has used fund balance to offset budget shortfalls as well to reduce cuts in the classroom. In the current school year (FY19-20), over $4.0 million in unassigned fund balance is being used to avoid budget cuts, bringing the unreserved fund balance down to $6.0 million or 4.81%, which is below the threshold set by the school board. Use of fund balance is not a sustainable means to fund schools. If new revenue is not generated, the school district must reduce costs.
Q: When is the next possible opportunity for the school district to ask for another Referendum?
A: It is up to the school board to determine when is the best time to go back to the polls.
Q: The Proposed Cost Containment document published in the Spring of 2019 included a total budget shortfall of $4.5M. Why has the amount increased by $500,000?
A: Government agencies review their budget forecasts as new information is received. Changes in enrollment, funding sources, inflationary costs, employment contract settlements, and mandates from the State of MN are factors which cause the school district to update their budget forecast. With updated factors and final results in our audit report, the updated forecast for fiscal year 2020-21 requires a cost containment plan of $5.0M to keep the district’s unassigned fund balance above 5.0%.
Q: I understand that the district owns several parcels of land. Can the district choose to sell this property and then use these funds to help with budget shortfalls?
A: The district owns three properties for future use in Chaska and Victoria. MN Statute restricts the use of funds from the sale of property.
- 1.0 acres in Downtown Chaska – it has been for sale for a year, but we have not had any interest in the property
- 5.65 acres in Chaska near the new 212 overpass & Big Woods Blvd. This property was purchased in 2017 with voter approved bond funds from the 2015 referendum. The purpose of this property is for a future elementary.
- 19.75 acres in Victoria which is being considered for a land swap or sale to purchase property for a school district facility for future needs
It would not be prudent for the school district to sell the Victoria and Chaska (Big Woods) properties with future developments anticipated in all four communities within Eastern Carver County Schools district. Even if the district sold these three parcels of land, by state statute these funds cannot be used in the general fund. Therefore, it would not provide relief to reduce the amount of cost containment.
