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District faces bleak financial picture

Posted: Thursday, Jan 17th, 2013

HURON — The Huron Board of Education met with its finance committee Monday night after the regular school board meeting. The finance committee was formed last year as a financial advisory group to help the board deal with its ongoing financial troubles.

This is the third meeting with the committee. In prior meetings, the committee had instructed the board to scale back the original opt-out to a $750,000 opt-out for one year; look at maintaining two years of solvency instead of looking ahead five years; to keep the pressure on Pierre for additional funding; and to take advantage of the capital outlay flexibility without crippling the district. The Legislature has loosened the rules regarding districts’ capital outlay funds, allowing them the opportunity to transfer some of that money into their general funds.

Huron has done that, but the capital outlay funds are also used for purchasing text books, school buses and building repairs. This fund is also used to repay the capital outlay certificates issued for the high shool, arena and Madison renovations. The capital outlay fund comes from a $3 tax levy per $1,000 valuation. Of the $2.6 million in the capital outlay fund, only $220,000 are not earmarked for a specific purpose.

Business manager Kelly Christopherson facilitated the discussion and began by giving the group an update on the district’s enrollment and financial picture.

He started by saying that the district anticipates continued enrollment increases for the next five years, averaging 50 or more students each year. He also explained that the district’s English as a second language population has jumped from zero in 2002 to 670 today, which is 30 percent of the district’s total enrollment. Christopherson said the ESL programs will cost the district $750,000 this year.

Christopherson explained that the general fund cannot fall below $1.2 million or the district will not be able to pay its bills throughout the year. The balance on June 30, 2013, will be $2.6 million; in 2014 it is projected to be $1.2 million; but by 2014, the fund balance will plummet to minus $572,000 without an opt-out.

“That will leave the district with a $1.8 million problem,” said Christopherson. “All of our extra curricular activities and busing expenses add up to less than $1 million.”

A big part of the problem is the education funding cutbacks that came out of Pierre. “If state funding had followed the funding formula according to state law, we’d be receiving about $500 more per student,” said Christopherson. “That would be $1 million in Huron. That is the majority of our problem.”

He continued to say that while expenses have been steadily climbing, school funding has not. “Our health insurance costs have gone up 105 percent since 2005,” he explained. “In that same time, state aid per student has only increased 7 percent.”

The board and the district will continue to push for increased funding from Pierre. One part of the discussion is to remind lawmakers that state and city taxes collected in Huron have increased by 43 percent, but none of that income comes back to the school district.

A lot depends on what comes out of the current legislative session. There is a lot of optimism that the legislature will authorize extra ESL funding and maybe some one-time money. Christopherson also said he expects the body to follow the funding formula this year, but the district will still be facing the need for another opt-out as that will still only put the district at 2007 funding levels.

No one at the meeting wanted to cut programs or staff, saying that Huron’s excellent school system is a vital part of the city. The current opt-out for $750,000 added 72 cents per $1,000 for an owner/occupied home. Any opt-out would need to be passed by Oct. 1 to keep the district from facing drastic staffing cuts and increased classroom size.

Christopherson also discussed the middle school bonds. He pointed out that when the bonds were issued, homeowners were paying $2.81 per $1,000 valuation. By 2012, that had dropped to $1.16. For comparison, he said new bonds for the elementary schools will cost about $1.35 per $1,000.

For the complete article see the 01-16-2013 issue.

Click here to purchase an electronic version of the 01-16-2013 paper.

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