Hills Crescent readers absorbed plenty of school news in 2012.
For the first six months of the year news coming out of special Hills-Beaver Creek School Board meetings found that the Patriot books had been bleeding, not just now but for several years.
Residents first read something was amiss with the finances in the Jan. 12 issue. At their first meeting of the year, Board Chair Gary Esselink announced he had received notification that the district was in Statutory Operating Debt.
At that meeting Superintendent David Deragisch made mention of debt payments and final construction payments being due in the days ahead.
Two weeks later it was announced that the district was submitting an application for Aid Anticipation Borrowing. Deragisch was absent from this board meeting without explanation from the board.
Elementary Principal Todd Holthaus advised the board on the loan saying, “Time is of the essence; you need to act quickly on this because the district’s cash flow situation is in dire straits.”
This meeting on Jan. 23 ended in closed session to discuss possible legal action against an employee.
On Feb. 2 the board met in front of television cameras and a room of constituents for a special meeting to accept Deragisch’s resignation. He had served as superintendent since 2002.
The reasons for the resignation were not given and have not been discussed publicly.
District hires interim superintendent
At the same meeting the board moved to hire Herb Benz as a fiscal consultant and interim superintendent.
Benz immediately started going through the district’s finances. On Feb. 16 readers got their first glimpse of the depth of the problem.
Benz informed the board that the district’s financial picture is difficult to determine. He said that numbers from the prior year’s audit were incorrect due to an accounting error.
Later in the spring that error took the unreserved fund balance for 2011 from -$143,926 to an estimated -$330,000.
A negative $179,237 balance in the district’s Health and Safety fund was affecting the district’s SOD situation.
He also indicated that the school’s construction fund went over budget.
The biggest blow came in late February when Benz showed a chart that proved the district was in SOD not only for the past year but for the past two years. He said the problem was among the five worst schools in the state.
In a newsletter distributed in May H-BC’s SOD was a negative $193,344 for 2009-10 and a negative $330,000 for 2010-11.
It was in the newsletter that Benz presented a plan for recovering from SOD.
The plan suggested $100,000 in payroll cuts.
At a meeting in April Benz said, “With about 80 percent of our budget going to payroll, these cuts have to happen.”
Cuts begin process of changing personnel
The proposed cuts would become a heated topic of public discussion over the next two months.
At the conclusion of several regular and special meetings the following certified staff were terminated: secondary teacher Brett Pappas and elementary teachers Cassie Uithoven and Kala Bush. Vocal instructor Jodi Ackerman’s contract was reduced from 1.0 FTE to 0.67 FTE.
Bush was later hired back as a .5 FTE teacher in third grade.
The board also cut six non-certified positions: paraprofessionals Shari Doerr, Brianna Leuthold, Sherry Paulsen and Sheila Sawtelle, school nurse Lois Leenderts, and bus repair person Doug Boeve.
Leenderts was later hired to serve in a smaller role at the school.
In June the board was also busy finalizing administrative contracts for the upcoming school year.
Elementary Principal Todd Holthaus was hired to serve a three-year superintendent contract for $101,512. New elementary principal Corinna Erickson was hired for one year at $75,000.
In July district payroll clerk Wilma Bengtson was terminated. The district opted to save money by using payroll services through the Service Cooperative, bringing approximately $7,000 in savings annually.
Borrow more, set a tight budget, look to future revenue
In June the district sold $915,000 in aid anticipation certificates. This is in addition to the nearly $800,000 the district borrowed in January.
At their first meeting of the new fiscal year with Holthaus leading as superintendent, the board approved a preliminary budget for the 2012-13 school year that will move the district’s fund balance ahead by $389,035.
At the first meeting in August Holthaus informed the board that the district needed to start looking at an operating referendum as a way to increase revenue.
On Sept. 6 the board met in a work session to discuss the need for the referendum and potential amounts.
By the end of the month the board voted to ask the public to revoke the current $855.79 per-pupil-unit operating levy and replace it with a new $1,521 per pupil unit amount.
For the next month they waited to hear from the state regarding their appeal to hold a special election. Notice of acceptance came in late October and set the stage for a Dec. 18 vote.
Holthaus hosted two public meetings in late November to present the district’s case for approving the referendum.
On Dec. 18 nearly 60 percent of voters said yes to the new levy amount, giving the district a much needed revenue boost in the coming year.
The additional revenue and tighter budget starts the district on a path that does not include an SOD plan.
Guiding the district through this plan will be four former board members, Jim Kueter, Arlyn Gehrke, Lois Leuthold and Tim Baker, and two new board members, Amy Fick and Karin Moser.
Moser and Fick were elected during the election in November. They unseated incumbents Ann Boeve and Gary Esselink.
Construction bills still unsettled
Questions still remain regarding the district’s construction budget and unpaid bills to construction manager Gil Haugan.
The firm filed suit against the district on June 19. The suit clams the district is liable for an amount exceeding $483,742, plus interest, attorneys’ fees, costs and sanctions under Minnesota law.
The district disputes the amount stated in the claim. The two parties are scheduled to meet in court in early February. If an amount is agreed upon, it is unsure how the district will opt to collect any additional funds needed.