Tricounty News

Kimball district prepares for S.O.D.

 

At the Oct. 23 meeting of the Kimball school board, the district’s auditor (KDV) presented the financial report for 2013; it shows the district in Statutory Operating Debt, or S.O.D. The state limits the difference between school expenditures and revenues to a 2.1-percent deficit; the Kimball district wastwice that: 4.2 percent or $255,000. 

This may seem like a lot, but keep in mind that the total yearly budget for the district is $8,073,310.

The problem is not so much overspending, however, as much as it is under-receiving. 

The crux of the problem is declining enrollment, and every student day counts.

Schools measure and report attendance as ADM, Average Daily Membership. The ADM for Kimball schools has continued a years-long trend of declining enrollment. 

 

Since 2009, for example, the ADM at all ages has dropped nearly 6.12 percent or 47.25 students. This includes 30.65 fewer high school students, 27.36 fewer elementary students, and an increase of 14.25 kindergartners since 2009.

Not all students count as “1” when calculating ADM. High school students count as “1.3,” for instance, and kindergartners count as “0.612.” When adjusting for these different values, the decline is 83.86 students or 9.75 percent since 2009.

Using the same “weighted” attendance, of 830.02 school-aged children living in the district, 647.66 attend Kimball schools, with 182.36 residents open-enrolled into other districts, while 128.21 residents of other districts open-enroll into Kimball schools. The number of resident students enrolling outside the district  has steadily increased, but so has the number of non-resident students attending Kimball schools. There currently are 13.62 more non-resident students in Kimball than there were in 2009, nearly a 12-percent increase.

Every student day counts

Why does the number of students matter, especially as ADM? Because that’s how the state calculates its funding to the district: on a per-student basis, as ADM. 

The Kimball district in 2013 receives $9,961 from all sources per student; that equates to $57.25 per school day per student (again based on the average attendance, and with different values for students at each grade level).

The 2013 revenue amount  is $192 per student less than in 2012 (that’s $148,967 less for the year). 

If you consider the 2012 state average of $10,545 per student ADM, however, the shortfall is $584 per student which is $453,108 for the year. That’s just the difference between what the district actually receives and the state average.

State funding

State funding, on which school districts are dependent, is just now beginning to catch up after four years of the state “borrowing” from school funds to pay its other obligations. 

This brings up another tricky point about school financing: the state reimburses districts only a percentage of expenses, and months, sometimes years, after the expenses are paid by the district; sometimes not at all. This is unlike any other business financing, and it would wreak havoc on any home budget.

Not only are reimbursements made much later than expenses are incurred, but the district has no choice about many of its expenditures. Special Education is a prime example. The state requires schools to provide full Special Ed services, as specifically prescribed by the state, and the district must pay for the teachers, paraprofessionals, learning materials, and transportation as they occur; but the school does not receive the money until 1-2 years or more later.

Imagine, if you will, making your car payment each month but your bank withholding for two years the funds to pay them, and then only giving you 71 percent of what you need.

Each year, school districts across Minnesota must borrow millions of dollars, with interest, just to pay their bills. It’s a twisted system, but it’s the only system.

The solution: fuller classrooms

The district pays the same dollar amount for a classroom with 17 students as it does for a classroom with 25 students. The teacher, desks, chairs, textbooks, heat, electricity, insurance, library and administration expenses, all are the same regardless of the number of students. But that extra 8 students would mean another $79,700 in revenue to the district. Add just 4 students to each of 6 classrooms, and the district receives $239,064 more in revenue; that would nearly wipe out the current deficit that puts them in S.O.D.

Naturally, it’s not that easy. The number of students in each class year varies greatly from one year to the next, and they don’t split into nicely balanced class sizes.

What happens now?

Sometime soon the Minnesota Department of Education will formally inform the district of its S.O.D. status. It means that, for the next five years, the Kimball district will lose some of its financial control. By the end of January, the district must prepare a detailed report that outlines (1) how the district will get out of S.O.D. (make up half the deficit, or $127,500) and (2) how the district will achieve a positive fund balance in another two years (make up the remaining $127,500).

This is not insurmountable. The district recovered from S.O.D. eight years ago, and it will again. The Kimball school board will need to look carefully at each and every option, and prepare to make some difficult decisions.