School facing budget blues again

Dwindling reserves and declining enrollment are likely to force another round of budget cuts in the Ely School District.Monday, school board members approved a resolution authorizing administrators to recommend reductions for the 2005-2006 school year.It’s too early to estimate how much will be cut from the district budget or even the size of the anticipated shortfall, superintendent Tom Bruels said last week.But enrollment could tumble by as many as 25 students, reducing revenue by as much as $150,000, and a 2004-2005 budget gap that was solved partly by using $300,000 in reserves has already taken a large chunk of the district’s ‘rainy day’ funds.That may make the next budget cycle all the more difficult, according to Bruels.The district has consolidated administration, reduced staff and cut programs over the decade, as enrollment has declined from over 900 students in 1995 to 645 this year.“The concern I have is there’s not a lot left to cut anymore,” said Bruels. “We may have to have some philosophical discussions with the board about (budget priorities).”The district closed a $569,000 gap for 2004-2005 largely through the use of reserve monies and a one-time savings of $134,000 realized by consolidating the superintendent and elementary principal positions.Results of the district’s 2003-2004 audit, released last week, show that the district’s has over $2 million in reserves, but $1.3 million is set aside for specific purposes such as bond payments and teacher’s severance.The district’s undesignated reserves fell from $1.1 million in 2003 to $778,000 this year, and paired with the anticipated use of $300,000 in reserves during 2004-2005, Bruels said it would be unwise to count on reserve monies to close another budget gap.“We can’t continue to make transfers from those funds,” said Bruels.Administrators will review the budget over the next two weeks and come up with an estimated budget deficit for 2005-2006. They’ll work with the board’s budget and finance committee to come up with options for next year.The district spent $7.9 million in 2003-2004, but that included more than $1.4 million in capital improvements, including floor tile replacement in the Washington and Memorial buidings, updated science and computer labs, asbestos removal and duct cleaning and the locker room addition to the district-owned ice arena.Salaries and benefits for district workers (almost $5 million in 2004-2005) account for about 76 percent of the district’s general operating budget, according to the audit report.And as school officials scramble to put together a balanced budget, they’ll look at both the expenditure and revenue sides of the ledger.There may be good news for Ely and other districts from St. Paul, where after years of stagnant funding, many state lawmakers have indicated support for boosting public education funding.Governor Tim Pawlenty (R) signed on last week, as well, although his plan to raise basic education funding by two percent falls short of the 2.5 percent inflationary hike sought by Senate DFLers.And locally, the district has the option to seek an excess levy referendum.To date, the district has held no formal talks about pursuing a referendum, which would result in property tax increases.