Feeling the squeeze
The Lake Park-Audubon School Board got some good news, and some that was not so good, in the form of the 2009-10 District Audit Report presented at Monday night's regular meeting in Audubon.
Brian Stavenger of Eide Bailly presented the audit report, which was prepared for the district by the Fargo-based firm.
Stavenger noted that the district received a "clean, unqualified opinion," which basically amounts to a positive review.
"It means our process of accounting is positive --we're doing the right things," explained Superintendent Dale Hogie in a later interview.
Overall, the district's finances are in pretty good shape, he added.
"Our general fund balance for the end of (fiscal year) 2010 was $420,990," said Hogie.
The general fund is the source of funding for most district programs, he explained.
There were a few areas of concern that were highlighted at Monday night's meeting, however. The district, like many in Minnesota, is faced with some "challenging cash flow issues" due to the state's current budget situation, as Stavenger pointed out.
For the past several years, the state has had a policy of paying out about 90 percent of the district's promised $3.5 to $4 million in state aid during the current fiscal year, with the remaining 10 percent being paid out the following year.
In FY 2010, however, the state withheld about 23 percent of its total aid until the following year. "At the end of the year the state owed you over $1 million (in delayed aid)," Stavenger noted.
The biggest problem with this lies in the fact that while the state can "borrow" this money from school districts to balance its budget, interest free, the school district must in turn borrow money to pay some of its bills -- a process known as aid anticipation borrowing.
But as Stavenger noted Monday, the money the district borrows is not interest free.
Though the overall general fund situation is still positive, the district's expenditures in this fund were about $101,000 more than revenues for FY 2010. Still, Hogie stated, "The district is sound financially.
"We have a positive fund balance," he added. "If the state (aid) payments would come in as they were earned, we'd be fine."
Unfortunately, Stavenger said Monday, LP-A's situation is not uncommon -- and given that the state has a projected $6 billion budget deficit heading into the next biennium, it's not likely to improve too much in the immediate future.
"Things are going to be tight for a few years," he said.
In fact, Hogie noted, there has been talk that the state will defer as much has 30 percent of its school district aid payments for the coming year -- and there may be actual cuts in state aid to deal with as well.
"The future for funding in Minnesota doesn't look good," Hogie said. "Education in all likelihood will have some reductions (in aid) so the state can resolve its deficit.
"The dilemma that school districts are in is that we've been frugal for years. We've been making cuts, concessions at the local level ... but that doesn't stop the rate of inflation or the cost of services from going up.
"We always work toward a balanced budget -- that's our goal," Hogie added. "If they decrease our (aid) money, we don't have the liberty to go out and generate new revenue without voter approval ... we have to live within the revenue we anticipate right now.
"The bottom line is, we're concerned."
The report was approved as presented Monday night.
In other business, the board approved a resolution to team up with the Fergus Falls-based West Central Initiative to set up what is called a component fund.
Tom McSparron of WCI was at the meeting to explain how the fund will work once established.
Money raised via donations to the district will be placed in this fund, which will be managed by WCI.
The funds will then be distributed from WCI back to the district in the form of grants, which will be used to enhance existing school programs, and possibly to establish new ones.
The district will first form a steering committee to determine what the schools' greatest needs are, and then recommend members for a permanent Advisory Committee.
Once established, the Advisory Committee would then help WCI to determine how the funds would be distributed once received.