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by Tom Coombe
The Ely School District’s fund balance tumbled by $472,979 in 2023-24, taking another significant chunk out of its reserves.
On Monday, school board members reviewed an audit report that showed a budget lined in red ink for a fourth consecutive year.
But while fund balances dipped by about $96,000 in 2022-23, the decrease in the fiscal year that ended June 30 was almost five times as large.
The district had $8,707,092 in revenues and other financing sources of just over $153,553, while expenditures came in at $9,333,624.
The end result was a dip in district fund balances, which fell from $2,019,800 in 2022 to $1,923,021 at the start of the 2023-24 fiscal year to the June 30 balance of $1,451,474.
Of that, just about $1 million is in unrestricted fund balances, which combines funds the district classifies as unassigned, assigned and committed
In the mid-2000s, that total was in danger of falling into a negative balance but climbed steadily after voter approval of an operating referendum.
But since 2020 in particular, the district’s financial fortunes have reversed, with overall fund balances falling in half, from $2,895,695 four years ago to the current reported balance of roughly $1.45 million.
Unrestricted reserves have fallen even more precipitously, from about $2.68 million in 2020 to the present estimate of $985,906.
School officials had little comment about the audit report, which was delivered by representatives of Brainerd firm CliftonLarsonAllen at Monday’s board study session.
Two board members, Tom Omerza and Hollee Coombe, were absent while board chair Rochelle Sjoberg was present with members Tony Colarich and Jen Westlund, superintendent Anne Oelke and other school staff.
Sjoberg said “it is a good time to process,” the numbers and the report in advance of the board’s January meeting.
The board’s finance committee is expected to meet while Oelke said that the district would take a mid-year look at the current 2024-25 budget.
“(Finance manager) Jordan (Huntbatch) and I would like to do a revised budget in January, which is something we haven’t done for a while,” said Oelke. “We want to be comfortable in getting in the habit of doing a revised budget.”
Oelke said that a revised budget might also help “so we don’t have these surprises,” related to deficit spending.
The audit report showed that while revenues for 2023-24 were almost identical to what was budgeted, actual expenditures were eight percent more, or about $715,000 more than budgeted, with six-figure increases in the actual costs of regular instruction ($338,124 over budget), sites and buildings ($265,000) special education ($124,000) and pupil support ($147,000) services.
“You’ll see a pretty significant decrease in the unassigned fund balance in the last couple of years,” said CLA’s Mallory Carlson, who worked on the audit. “You’ll want to monitor your spending going forward and slow down that rate of decrease.”
Action last month by district voters may also help curb the red ink.
In November, Ely voters approved a $350,000 levy that will pump additional revenue into the district’s coffers on an annual basis.
Carlson also noted that “we know your ADMs (student population count) are decreasing,” which directly correlates to state aid received by the district.
The district’s ADM was at 574.69 in 2020 and has since fallen to 512.42, including a 14-student drop from 2023 to 2024.
Incoming kindergarten counts have fallen by roughly 50 percent during the same timeframe.
The district was aided in part by federal Covid-19 funding in the wake of the pandemic, but those funds have dried up and made the district more reliant on enrollment and corresponding state aid.
Until only recently, the Ely district boasted a somewhat healthy reserve, with the school board setting goals to keep at least 10 percent, and later 20 percent of operating expenditures in reserve.
While those were goals rather than mandates, school board members have at times pointed to the reserve when managing district finances.
The June 30 unrestricted reserve balance amounts to 10.5 percent in reserve.
The audit includes a finding of deficiency related to segregation of duties in the district’s finance office, but that is noted annually and is common for small units of government that have staff limitations.
