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District looks for ways to utilize $11.4 million

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Cottage Grove, 55016
Cottage Grove Minnesota 7584 80th Street South 55016

With $11.4 million above what is needed to fund education for next year, School District 833 officials are faced with how to spend the money in a responsible way.

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When times are tough for education funding, school boards have a hard time cutting items to make sure the district stays out of the red ink.

On the other hand, when times are better, it has the same problem in reverse. With more than $3 million in requests for new programs and others that were cut in the past, District 833 will have a tough time deciding which items will make the final cut at the end of June.

Board members will also have to decide how to reduce the $11.4 in unallocated money that came as a result of the board making a series of cuts, some of them radical, because there had not been an increase in funding from the Legislature for three years.

Two years ago, there were changes in the funding formula and tax evaluations. In addition, the district spent much less than it anticipated.

The money cannot be used for anything other than education. It cannot be used for repairs, leases, paying off bonds or building facilities, according to state law.

Supt. Tom Nelson recommends putting $5 million from the excess fund balance into the Internal Service Fund that takes care of teacher severances, health insurance and retirement. Putting a large amount on the front end is a one-time allocation that would not have to be made in successive years.

Having the money there allows long-term investments to be made, according to district finance officials.

Unlike many districts statewide that have not paid into internal service funds and took the money to pay for teachers in lean times, District 833 has kept up its obligations and the account is currently 80 percent funded, Nelson said.

Nelson argued the $5 million lump sum would ease annual contributions in future years.

A new state law gives districts until 2010 to make teacher retirement funds whole. If districts are caught short, required payment schedules would be ordered by the Minnesota Department of Education.

If the one-time payment is approved, Nelson's plan is to then consider $2 million for additional programs and materials, pared down by the administration from more than $3 million.

One of Nelson's recommendations is further reducing class sizes by .5 students, which board members appear to favor.

Some of the remaining money would then be spent over the next two school years until the amount is in line with School Board policy and auditor recommendations.

Board Member Jim Gelbmann said more of the money should be spent now. But it appears he is the only advocate on the board.

"We always see gloom and doom in years out," Gelbmann said. "Our projections are always conservative. I'm still convinced we need to invest more in education. We don't have the enhancements other districts have fully funded."

He said the teacher retirement account did not need to be fully funded until 2010 and, even then, payments would be made over 30 years.

The recommendations are "middle of the road," according to Nelson. "We are projecting a 2 percent increase each year in state funding."

"You weren't here then," Gelbmann said. "We showed doom and gloom two years out."

"I suggest those budgets were based on no increases," Nelson said.

"What are you concerned about?" Board Member Marsha Adou asked Gelbmann. "Nineteen other districts are in 'statutory operating' debt."

"We're about $14 million away from that," Gelbmann said.

Board Member Denise Kapler said, "more conservative is much better" and proves to the public the district manages money well.

Board Chair Ron Kath said he supports making the $5 million contribution to teacher retirement so "future generations are not set up to pay."

"I've been portrayed as reckless," Gelbmann said. "We can afford to spend down one or two more million."

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