The Winona Area Public School Board of Education must reduce its budget by $1.67 million over the next three years, and is expected to cut $500,000 for 2013-2014, $700,000 for 2014-2015, and $450,000 for 2015-2016.
The total figure is about $175,000 more than earlier estimates; the final numbers were compiled after the district’s 2012 audit report was finalized last week. At last Thursday's meeting, board members were given a quick presentation on the basics of school funding, declining enrollment, and other factors that will require the district to continue reducing its budget in the coming years.
District Finance Officer Dan Pyan told the board that the numbers may change in the next few years due to a variety of factors—from the federal “fiscal cliff” that threatens to reduce school funding across the nation, to potential funding changes due to a state deficit.
“You have to remember: this forecast is wrong,” said Pyan of the numbers. There is no way to accurately predict the future of school funding, he said, so district officials must continue to monitor a variety of factors to refine budget figures.
Part of the reason that the district must make the cuts is that it must maintain a certain percentage of reserve funding. But that is a fund that it has continually tapped to cover financial gaps in recent years. The goal is to keep at least 16.6 percent of annual expenses in that reserve account. At the end of the 2011-12 school year, the fund was at 21.87 percent. For the 2013-14 budget, the district is expected to spend about $1.15 million of reserve dollars while cutting $500,000 in expenses. That will put the reserve balance at about 18.15 percent of annual expenditures.
Pyan explained that the figures relied on a host of different assumptions, such as nine percent increases in health insurance costs over the next few years, estimations of fuel costs and anticipated retirements, and fluctuating state aid formulas.
With about 77 percent of district expenses being employee salaries and benefits, one of the big expenditure assumptions is what will be decided by union contract negotiations. With five unions expected to begin negotiations on new contracts soon, Pyan said it is difficult to predict the outcome of those negotiations. “That’s a tough one,” he said, especially with the union groups. He said it was like a “chicken or egg” situation. “If we budget a certain amount, is that what the contract will settle for?” he asked. And if we don’t budget for that, he wondered, will we have the money to pay for what the union groups are asking? “These budgets are public information,” he added. Anyone can look at the budget numbers, he said, but for contracts that have not been settled, any estimated contract costs do not necessarily reflect the cost of the final union agreements. “We have to settle for what we can afford,” he added.
Budget reduction process
The board voted unanimously on Thursday to adopt a process for how budget reductions should be identified, but learned that the process recommended by administrators had already begun.
Board member Mohamed Elhindi presented a list of ideas for how the process should proceed, ideas that the board agreed would fit well with the process recommended by administration. The administrative suggestion includes a committee of district administrators that will study the budget and provide a list of recommended cuts to the board early next year. Elhindi’s ideas clarified how members of the public could be allowed to weigh in on budget cuts.
The board discussed how feedback could be collected from community members. Elhindi initially suggested that three public forums be held for the public to learn more about district expenses and budget cuts, but the board agreed one forum on January 31—combined with online surveys and feedback during board meetings—would be a good way to collect those opinions and ideas.
Board member Steve Schild warned that while public input would be nice, he doubted that feedback from parents and community members would address student achievement, a big concerns in the district. He said public comment about significant educational concerns either wouldn’t happen at all, or those concerns would not be expressed very often. He said district staff members understand student needs and school budgets better than citizens do.
Elhindi’s plan also called for the board to submit “budget reduction priorities” to the administrative committee. He gave examples of what those priorities could be: “cuts should not minimize impact on current academic programs; do not weaken the district’s capacity to recruit and retain students; and ensure that sufficient academic programs are available to meet long-term demographic trends.” He said defining the board’s priorities would help the administrative committee identify the budget cuts that would be acceptable to the board. While the board voted to adopt the ideas, it is unclear when board members will create and share those budget cut priorities.
Hannon said the process had already begun, and that he had started meeting with union representatives to gather input on where employee groups think the budget reductions should be made.