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Moorhead School District may use reserve funds

MOORHEAD -- Moorhead school leaders are proposing a move they recently said they planned to avoid - dipping into the district's "rainy day" fund to dodge budget cuts this spring.

Officials say deep budget cuts last spring, the influx of one-time federal stimulus funding and a modest contract settlement with the district's teachers dramatically brightened the budget outlook for the coming school year. Even assuming a 2 percent cut in aid from the cash-strapped state, the district is only looking at a $405,000 shortfall, compared to an earlier $1.3 million forecast.

Assistant Superintendent Wayne Kazmierczak said at Monday's board meeting the district will continue looking at cost-saving measures. But he pitched the idea of counting on the district's fund balance to cover a possible deficit.

"We recommend that the district dip into reserves if necessary to avoid further staff reductions," he said. "We think this is the rainy day we've been talking about."

The board did not have to act Monday on the suggestion. But member Bill Tomhave voiced qualms about drawing down the balance: "This rainy day is more of a monsoon. We're settling into a season of shortfalls."

The board approved a revised - and healthier - budget for the current fiscal year. Rather than roughly equaling expenditures, revenues outpaced them by about $1.4 million. The district is poised to end the year with more than $7 million in its unreserved fund balance, or

15 percent of annual expenses.

If legislators spare education in their upcoming session, the district is looking at a balanced budget for next year.

But, Kazmierczak pointed out, the district faces a lot of uncertainty about how the state will handle its projected $1.2 billion deficit. The state will start delaying payments to districts in the spring, and funding cuts are starting to look more inevitable.

Still, Moorhead officials said the district is in stable enough shape to hold off on more cuts for now.

"We're looking at it as a reprieve for a year," said Superintendent Lynne Kovash.

Officials previously suggested they might cut deeper this spring than they needed - a preemptive measure in anticipation of larger deficits in coming years. The district is looking at a $1.58 million shortfall the year after next and $2.8 million the year after.

Those are the numbers Tomhave noted in questioning the wisdom of dipping in the "rainy day" fund, a solution he said is unsustainable. But Kazmierczak said it would make the most sense now. He brought up the possibility of another levy referendum in the fall.

"There's no optimism coming from the state," he said. "Our only hope is locally."

The district hasn't decided on whether to go to the polls in November, though Kazmierczak said that's a matter of "when," not "if." Last fall, voters narrowly rejected an $850 per-pupil levy.

"The deficits are there going forward, but we seem to have stopped the bleeding a little bit," Kazmierczak said. "But that doesn't change our needs down the road."