District 196 budget includes projected shortfall

General fund gap of $5.3 million expected

After prospects for 2 percent increases in the basic education funding formula seemed dim, the Rosemount-Apple Valley-Eagan School District developed its 2017-18 preliminary budget assuming districts would receive 1 percent increases in the next biennium.

The state Legislature went overtime in its work in May, but it resulted in formula increases of 2 percent for the 2017-18 and 2018-19 school years.

That means District 196 will have an additional $1.9 million in revenue to incorporate into the budget — a preliminary version of which will be considered for approval Monday by the School Board. A final version is due after enrollment counts are released in October.

The $1.9 million represents less than 1 percent of total revenues expected in 2017-18 ($437.4 million), but every dollar counts as the budget shows the district covering a general fund shortfall of $5.3 million with its general fund balance of $29.22 million.

Jeff Solomon, the district’s director of business services, said during the June 12 School Board meeting that the district won’t have to make significant budget adjustments in the coming school year, but the general fund balance would be drawn down to 6.8 percent of expenditures.

District 196’s policy is to keep the fund balance as 5 percent of total expenditures in order to cover unexpected expenses.

The budget shows the general fund balance at $23.8 million at the end of 2017-18.

He said past budgets in the district have performed better than expected as either revenues were higher or expenses less than budgeted. Last year, the district “beat budget” by about $5 million.

“The district is committed to continue to engage staff and community members in further budget discussions and to consider other options for increasing revenues and containing expenditure growth,” Solomon wrote in the budget report.

When the Senate and the House were proposing annual basic education funding formula increases of 1.5 and 1.25 percent, respectively, District 196 officials urged local residents to contact legislators to urge them approve 2 percent annual increases as the governor proposed.

If the formula was not increased, the district previously reported it would have to make $3 million in budget adjustments, including district office staffing reductions, cuts to curriculum expenditures and professional development, and revenue enhancements.

The 2017-18 budget includes adjustments from the 2016-17 budget, assuming the impact of inflation and contract costs, reductions of $1.2 million in capital expenditures and $291,000 in teaching and learning, savings and new revenue of $300,000 in transportation services, and a $1.5 million transfer from the Other Post-Employment Benefits trust fund.

The district employs approximately 4,000 full- and part-time staff members. Staffing changes are projected based on enrollment for 2017-18, including increases of about 47 full-time equivalent teaching positions and about 30 in secretary and clerical.

This fall the district opens its 19th elementary school — East Lake, which is located in Lakeville near the corner of Diamond Path and 160th Street.

Districtwide enrollment is expected to increase from 2017 to 2018 from 27,244 to 27,803. District 196 is the fourth largest district in the state.

About 20 percent of the district’s revenue comes from local property taxes.

A residential property valued at $323,000 in payable 2017 had about $1,600 in school property taxes.

Seventy-four percent of the district’s revenue comes from state aids. The basic education funding formula of $6,128 per pupil unit will increase to $6,249 in 2017-18.

Contact Tad Johnson at [email protected] or at twitter.com/editorTJ.