District 196 approves using reserves to balance budget

The Rosemount-Apple Valley-Eagan School District unanimously approved a proposal to borrow from the district’s reserves to balance the budget in 2014-2015 and avoid making cuts.

District 196 revenues in 2014-15 are predicted to be $318.3 million but expenditures are projected to be $323.4 million, which leaves the district with a $5.06 million shortfall.

Since beginning its budget process last year, district officials have expected a shortfall in 2014-15 because funding failed to keep up with inflation for a number of years, said Stella Johnson, District 196 coordinator of finance.

District officials plan to borrow from the district’s general fund balance. Under this scenario, the fund balance will be $23.7 million, which is 7.35 percent of general fund expenditures. Board policy requires a fund balance that is at least 5 percent of the general fund.

The 2014-15 school year will be the second school year the district has borrowed from its general fund balance.

The district’s total budget is projected to be $406.9 million.

The district will be able to avoid cuts next year thanks to increased state aid and a $30 million annual 10-year levy referendum, Johnson said.

The levy referendum passed by voters in 2013 will raise $1,486 per pupil each year.

The 2013 Legislature increased basic funding by 1.5 percent for 2013-14 and another 1.5 percent for 2014-15.

In May, the Legislature agreed to provide an additional $25 per pupil or 0.5 percent increase for 2014-15.

District 196 relies heavily on state aid, which accounts for 76.45 percent of its budget. Property taxes account for 18.09 percent, while federal aid makes up 2.45 percent of the district’s budget.

In addition to increased funding, District 196 is on track to save $4 million in its 2013-14 budget, Johnson said.