January News from the Superintendent
Minnesota public school funding has been in the news lately. The fact that over 37% of the state's general fund budget is spent on K-12 education ties any state economic woes to public schools. State lawmakers and the Governor are facing a $1.2 billion deficit during this fiscal period and probably a $5-6 billion deficit in the next biennium.
In attempting to balance the $31 billion budget, the responsible parties may have to examine the method of which and the amount the state's general fund contributes to K-12 education. Presently local school districts receive state aid based on a per-pupil formula. The formula amount in 2008-09, 2009-10, and 2010-11 is $5,124 per pupil unit. A pupil unit is basically a student weighted based on its grade level. For example, New Prague Area Schools had an enrollment of 3,573 students in 2008-09 and for funding purposes was credited with 4,237 pupil units. Multiplying $5,124 by the pupil units resulted in NPAS receiving $21,709,005 in basic general education aid in 2008-09. Other aids are paid to school districts based on free and reduced lunch participation, gifted and talented student needs, distances required to transport students, English speaking proficiency, and building ages. NPAS receives an extra $1,138 per pupil unit based on these factors.
The other aids, known as categorical aids, vary for each district. The total of $6,262 which New Prague Area Schools receives ranks 260th out of 340 school districts. General education is also funded by local taxpayers in the form of an operating referendum, in New Prague there is presently a $757 per pupil unit referendum. The taxpayers in the New Prague Area Schools district voted to fund the district with about $3,179,400 per year. Even with the extra local dollars, NPAS ranks 259 out of 340.
If state lawmakers and officials choose to balance the state budget by proportionally reducing funding to all the agencies of which the state funds, Minnesota schools could face a reduction of $500 in per pupil funding. In New Prague that would translate to $2,118,000 per year.
NPAS' annual general unreserved budget is a little more than $30 million. After all expenses were paid in 2008-09, the general unreserved fund balance was about 1% or $300,000, about two days of operating costs. The New Prague Area Schools Board of Education has set financial targets of a fund balance of 5%, reached by increasing 1% per year until 2013.
To accomplish this goal, school administrators were asked to formulate a budget plan. The plan last year required $1 million is budget reductions in the 2009-10 budget. To stay on track, the budget will need to be reduced by $500,000 in the 2010-11 budget and $780,000 in 2011-12 budget.
The plan assumes a slight increase of 1% per year in the formula mentioned above. The formula has increased an average of 1.2% per year since 2002-03, during the same period; inflation has increased about 3% per year. This revenue/expense imbalance has caused any fund balances to decrease or required budget reductions to be implemented.
The amount of state aid paid to Minnesota school districts is of vital importance to the existence of local school districts. A cut of $2 million in aid will drastically affect how K-12 education is to be administered in New Prague and Elko New Market.