Taxpayers seek budget answers at first informational meeting
A second public meeting scheduled for 7 p.m. tonight

Voters looking to learn more about the proposed Hills-Beaver Creek operating referendum attended the first of two informational meetings on Tuesday, Nov. 20. 

The second meeting is scheduled for tonight, Thursday, Nov. 29, at 7 p.m. at the high school in Hills.

During the Nov. 20, meeting Superintendent Todd Holthaus outlined the reasons the board opted to put the referendum before the voters.

Holthaus focused on the need for a healthy unreserved general fund balance. This is the fund used, at the board’s discretion, to pay operating expenses.

He highlighted four reasons why this fund should have between 5 and 15 percent of annual expenditures at any given time.

Those reasons are emergencies or unforeseen expenditures, enrollment changes, low or negative balances forcing the district to borrow money in turn increasing expenses, and the state funding shift that withholds 40 percent of state funding to schools.

Since 2010 the district has been operating in a position where the general fund balance exceeds a negative 2.5 percent of the general fund expenses. That is the reason the district is in Statutory Operating Debt.

Holthaus reported that the district has not seen audit numbers for 2012 but he expects the deficit to reach $480,000.

He outlined budget reductions the district put into place before the start of fiscal year 2013. These cuts are in his presentation which can be downloaded on the Hills Crescent website or the H-BC website.

He added, “Moving forward ... any more program reductions made could potentially reduce the district’s local competitive edge with neighboring school districts.”

The final portion of his presentation focused on the proposed $1,521 per pupil operating referendum and how it will affect voters, staff and students.

He stressed that agricultural properties will pay for the referendum based only on the value of the house, garage and one acre.

It is estimated that the increase to the current operating referendum will generate approximately $250,000 of revenue for the district.

Voters decide on the proposal on Tuesday, Dec. 18. Approval of the referendum requires one vote over 50 percent. If it passes, the district will begin seeing the revenue in 2013.

Holthaus gave several examples of how and where the additional funds will be used and emphasized it will decrease the time needed for the district to return to a healthy unreserved fund balance.

He concluded that if it does not pass, “further reductions to programming and operations will have to occur.”

Failure to pass would not affect the current operating referendum. The district would retain the current $855.79 per pupil levy until it expires in 2015.


Construction fund issues

Holthaus answered questions about outstanding bills with regard to the high school construction project.

A complaint was filed June 19 against the H-BC District on behalf of the plaintiff, Gil Haugan Construction. 

It states that the district is liable for an amount exceeding $483,742, plus interest, attorneys’ fees, costs and sanctions under Minnesota law.

“The school board currently has legal counsel working to resolve those issues,” Holthaus said in his presentation. 

“Based upon guidance from legal counsel, neither board members nor administration should comment further as the matter is in litigation.”

However, several citizens addressed both Board Chair Gary Esselink and Holthaus with questions about the project.

Peter Bakken asked whether the referendum funds would be used to pay any outstanding construction bills.

Holthaus responded by saying that the referendum can be used only for specified expenditures.

Bakken also asked about the old high school building and plans for “taking care of it.”

Esselink explained that the district was maintaining the buildings still in use and doing its best to secure the old classroom building but did not intend to heat that building.

He said the district does not have the funds to pay for demolition.

Later Jay Bakken echoed concerns for the potential of using the proposed levy to settle unpaid construction funds.

Esselink said, “It could be used but is designated operating. That is not the intention of these funds.”

Steven Paulsen also asked if taxpayers will be asked to “bail out” the district’s construction bills.

When pressured on the extent of the amount owed or the source of the outstanding bills, Esselink repeated that the board has been advised not to speak on the matter.


Debt service funds are separate from operating

Debt service funds are collected from taxpayers to pay off debts from approved bond issues. The district currently has three such bonds: the high school, the locker rooms and the elementary school.

Within eight years the locker rooms and elementary school bonds will be retired.

In previous years those funds were deposited into the general account and debt payments were made from the general account twice a year.

Although the practice is legal, this past spring the board opted to deposit dept service funds into a separate account that is used only to pay debt payments.

Holthaus said the funds collected from the proposed operating referendum would not intermingle with debt service funds.


Other issues discussed

during the public meeting

The public was invited to ask questions or comment during the meeting. The following highlights some of their thoughts.

•Wendell Bengtson spoke twice during the evening asking for details about why “everything tanked.”

He also asked why the board did not live up to its promise to give the public answers about why a member of the administration resigned.

Esselink explained that the board is unable to discuss those issues because of data privacy laws.

“I realize people are frustrated, but that day will probably never come.”

•Eugene Sandager asked if the district had looked at other options, including consolidation.

Holthaus said he had not investigated consolidation but believed the district’s debt load would make H-BC an unattractive candidate.

•H-BC elementary teacher Michele Baker invited “anyone” to spend a day helping in her first-grade classroom.

“We have a choice to make things better for our students and a future generation,” she said. “If you question that, then I ask you to go to school for a day and look into my kiddos’ eyes — the eyes of our future — and tell them no.”

•Kurt Olson questioned the amount being asked for in the referendum and wondered if things could improve with less.

He also asked how the district can ask for taxpayers to trust them with more money after everything that has happened.

Holthaus responded, “Trust is earned through circumstances and time.”


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