By Lori Ehde
During a painful work session last week, Luverne School Board and administration reviewed possible cuts to balance the budget of more than $400,000 the district is spending over revenues this year.
The proposed cuts don't take into account Gov. Jesse Ventura's threat of no new money for K-12 education next year.
No matter how the budget axe falls, the cuts will mean quality staff will lose their jobs and students will lose valuable programs.
What about the available $1.5 million?
The district has a $1.5 million operating fund balance. This includes the general fund, transportation, food service and community education.
These dollars are used for cash flowing monthly expenses.
In light of that much available cash, it's hard to understand the need to trim $400,000 at all - particularly from the perspective of teachers who may lose their jobs.
"This is $1.5 million extra money the taxpayers have given them," said Luverne High School guidance counselor Craig Nelson.
Nelson, past president of the teachers' union, said it's better to tap into some of the reserves than to lose important programs.
"Nobody feels we have programs that aren't necessary for children," he said.
From the board's perspective, it's true that there's a $1.5 million fund balance in the district's coffers. But that doesn't mean that money is necessarily up for grabs.
"Most of us wouldn't keep a zero balance in our checking accounts," said District Financial Officer Marlene Mann. "It's a $10 million budget, and you need to keep some money in there for cash flow."
Superintendent Vince Schaefer pointed out that the cuts are being proposed as a direct result of this year's budget.
"Expenditures should equal revenue; otherwise it's deficit spending," Schaefer said. "We're trying to be proactive and prevent going broke."
$630,000 for operating reserves
Of the $1.5 million that was on the books at the start of the school year, the largest and most controversial balance is in the general fund earmarked for operating reserve. In July, that came to $630,000.
"The board has always said we should keep about three months worth of operating capital in reserve," Mann said. "Now it's down to less than one month at the end of this year."
After this year's deficit spending, that balance will be about $200,000.
$336,000 for severance pay for retiring staff
There are eight Luverne staff members eligible to retire who are currently on staff.
If they were to all retire, and assuming roughly $25,000 each for first-year severance packages, the $336,000 severance reserve would be depleted by $200,000.
In addition, 10 people retired between 1998 and 2000 who will continue to receive insurance benefits through 2010.
"It's like we've already bought our stuff, and we've got it on a credit card, and we have to pay it off," Mann said.
Teachers and staff agree it's important to plan for these expenses, but Nelson pointed out that retirements also can mean a savings for the district.
This would be especially true in the case where a retiree leaves at the top of the pay scale ($52,000) and is replaced by someone at the bottom of the scale ($25,000).
"That money's always replenished," Nelson said. "Ultimately it can be used as general fund money."
$328,000 in the transportation fund
The balance in the transportation fund is partially from depreciation aid when the state funded transportation vehicles separately.
The dollars are used for transportation salaries, benefits, vehicle maintenance and to provide for insurance, fuel and vehicle replacement.
In the past couple of years, the balance has grown, because the district hasn't been forced to replace expensive vehicles.
But looming on the horizon - probably as early as next year - will be the purchase of a $50,000 special needs bus.
Also, threatening that fund balance is projected $3 per gallon fuel costs for next year.
"If we spend that balance down, these costs would have to be covered out of the general fund balance," Mann said.
$164,000 in the food service fund
Schaefer and Mann said the food service balance has grown through the years under good management of Food Service Director Lorraine Becker.
Kitchen improvements are anticipated to take about $70,000 out of that fund next year, but the remainder is designated for food service expenses.
"That's money that cannot be transferred out," Mann said.
Community Ed, staff development and grad standards
Remaining areas of Luverne's budget that showed balances at the start of this school year are Community Education, staff development and graduation standards.
The $30,000 grad standards balance will be depleted by the end of this year.
The staff development fund shows a balance of more than $39,000, and Community Education had nearly $39,000 at the start of the year.
Good management or crying wolf?
Of the $1.5 million that appeared in Luverne's fund balance at the start of the school year, Mann said an estimated $450,000 will be gone after this year's deficit spending.
The shortfall this year is due in part to high heating costs, snow removal, all day every day kindergarten, an extra third grade teacher who was needed for a larger class and contract settlements.
In addition, the district lost nearly $100,000 from the reduction of 20 students since the start of the school year.
Nelson said he has a hard time taking the funding woes seriously considering Luverne's budget history.
"As teachers and parents we find it difficult to accept that we'll have a deficit when we've never had one," Nelson said.
"I wish before they made cuts that they'd wait and see. Then, if they need to dip into the surplus, then do it. It's like the boy that cried wolf. Every two years we hear about the district going broke and it never happens."