District looking ahead to 2017; After ’16 session falls flat, Austin eyes important budget year

Published 10:18 am Wednesday, June 15, 2016

While Austin Public Schools leaders voiced displeasure with the 2016 session ending without bonding, tax or transportation bills, the 2017 session could have a larger impact on the district moving forward.

Superintendent David Krenz and Finance Director Mark Stotts said the district is beginning to feel a budget pinch from the Minnesota Legislature not increasing its funding as fast as the district sees risings costs and inflation.

“The state hasn’t kept up with increases in funding,” Stotts said.

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On Monday, Krenz told the school board during its regular meeting that the election-year session saw a lot of rhetoric and little action.

“There wasn’t a whole lot that was going to get done, and there wasn’t a whole lot that did get done,” Krenz said.

However, Krenz said there are some new mandates that will cost schools without providing new money, and there are some additional testing requirements, even after the end of the federal No Child Left Behind mandates.

While the tax bill would have helped taxpayers, it was vetoed by Gov. Mark Dayton. The district is now waiting to see if the Legislature will go into a special session, which only Dayton can call, to finish session work done.

The tax bill would have provided support for tax payers, in part by shifting an agriculture tax from the taxpayer, but Krenz cautioned that doesn’t equate to any new revenue for schools.

“It’s not gonna help pay our bills,” Krenz said.

Krenz noted some legislators have touted such a change as new school money, while it’s really more of a shift to help taxpayers, which he said is good as the district aims to be good stewards of taxpayer money. But it still leaves the district in need of more funding sources moving forward.

Krenz and district leaders are hoping for more action on school funding moving into next year’s budget-focused state session.

“It already has a drastic impact on our bottom line,” Krenz said. “Even though they’ll tell you you’ve done a tremendous job for schools, they haven’t.”

Krenz said school budget cycles come in peaks and valleys. Often in peaks, districts try to build their fund balance to prepare for the valleys when they get less money from the state. But things can get tough when the district isn’t able to build its fund balance back up.

Austin faces a few unique challenges. When the district added I.J. Holton Intermediate School at the start of the 2013-14 school year, it represented an increase in operating expenses and the district spent a bit of its fund balance.

The district prepared for this by building its fund balance to about $7 million by the time I.J. Holton opened. But today, the reserves are estimated at about $5 million, with the exact number expected to be released with an audit late this year. The reserves are projected to be spent about $3.5 million by the end of the 2016-17 school year. While such numbers may seem high, Krenz noted they’re really not, as a month of expenses is close to $4 million. He added the district aims to be responsible stewards of tax dollars and not to build up fund balances more than necessary.

While the district anticipated the drop in reserves, Stotts said the district needs to eventually get the numbers back up.

“This was planned, but at some point we’ve got to get our budget back in balance,” Stotts said.

The district is also growing, which would traditionally mean more perp-student revenue, but Krenz noted a high number of Austin’s growing populations require English Learning or special education services, and such services come at a higher cost.

“We’re not over-spending, we’re trying to provide for our kids, and it costs money to be able to run schools,” Krenz said.

To address the tight budgets, the district will aim to keep costs low and will keep 2016-17 staffing levels the same as the 2015-16 school year.

The 2017 legislative session will be an important one because it’s a budget year. Without additional funding from the state, Krenz said the next step would be to consider reducing staff or seeking additional funds through a referendum; however, the district has no immediate plans for either.

In the next session, Stotts also hopes the Legislature will look at a school funding.

“Next year is the important year where they set the biennium funding for school districts,” Stotts said.

Krenz said the district will continue working with legislators. While Krenz was critical of the end of the 2016 session, he praised state Sen. Dan Sparks and Reps. Jeanne Poppe and Peggy Bennett for listening to the district’s needs and working for them, noting the three don’t serve on key education committees.