By Aaron Vehling

Like a television meteorologist forecasting weeks of snow showers to spring-deprived Minnesotans, Randi Johnson offered a grim look at the fiscal situation of the North Branch Area School District.

The budget deficit for the 2005-2006 school year will be larger than expected, topping out at about $3.4 million, Johnson, the districtís finance director, said to an audience of mostly district employees Thursday, March 3, at a work session at Main Street School.

The situation was never a rosey one ñ the district predicted a $3.1 million deficit in months past ñ but the decline in enrollment has added insult to injury and was a surprise to the administration. The drop amounts to a loss of about $600,000 annually.
Although there are a variety of factors that contribute to the schoolís budget deficit, the district cited the primary suspects: the failed Fall 2004 operating levy referendum, a lack of increases in funding adjusted for inflation from the state, the decreased enrollment, increases in workersí compensation claims, growth in special education expenses and increasing fuel prices.

The operating levy would have provided $2.5 million in additional revenue, Johnson said. She added that the cost of fuel has increased 50 cents per gallon from last year. In addition, workersí compensation is up over $50,000.

Deficits in the general fund are no rarity in North Branch. For the 2003-04 school year there was a $3.5 million deficit. To solve it, the district combined $1.8 million from the fund balance and $1.7 million in cuts.

The current school year saw a $2.8 million deficit that was addressed by using $1.8 million from the general fund balance to keep the cuts at about $1 million.

One key to lessening cuts has been that the district is ìconsistently ending the year about $1 million-$1.5 million better than projected,î Johnson said. That fund balance is then applied to the deficit. She expects that amount to be about $1.1 million for next year.

One-time building setup costs for Sunrise River School will be paid out of the capital projects fund and will not be affected by the deficit.

One problem with this, though, Johnson said, is that people will wonder why the district is ìinstalling carpet when they are laying some off.î

ìThe money can only be used in a certain way,î she said.

She said she would work hard to keep the budget aligned with the school boardís strategic goals. She also mentioned looking into initiating ìleave of absenceî language for tenured teachers.

ìThe initial feel we are getting from principals is that we hopefully will not do it,î she said, ìbut itís possible.î

Johnson said that the situation could likely be better than what she is forecasting as she tends to be conservative about her estimates ñ but not much better.

ìThis is much less conservative than I typically am,î she said.

There are no concrete recommendations for what needs to be cut at this time, but according to the administrationís budget schedule, recommendations will be offered at some point in March with the school board taking action in April.

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