School District 196 Plans Deficit Spending

School District 196 is planning for $5.3 million in deficit spending—spending $5.3 million more than the district’s revenues--for the 2017-2018 school year, pushing the district “dangerously close” to its required minimum fund balances, according to the district’s finance director.
          The administration refused to release its preliminary budget for the coming school year, citing it would only be released after approval by the school board at their June 26 meeting. Last year’s preliminary budget included a general fund deficit of more than $8 million.
     The annual financial report required of local governments by the state of Minnesota shows that, in 2016, District 196’s expenses increased by $20 million. About $3.1 million of that was an increase in administrative expenses.
     In the 2017-2018 school year, District 196 plans to spend more than $358 million based on revenue projections of about $352 million, according to a school board budget presentation. That would result in a net operating loss of more than $5.3 million, according to Jeffrey Solomon, the district’s finance director.
     District policy requires a minimum bank balance of five percent of the district’s expenses. With the proposed deficit, Solomon told the board, “we’re coming dangerously close to that level.”
     Although the school district has been facing operating losses, there is no sign of spending slowing down. There are major construction projects at many of the district’s schools this summer, following a referendum approved by fewer than 9,000 voters in the district. The construction includes projects to limit parental and public access to school buildings.
     There has been little to no discussion of cutting expenses at recent school board meetings. The agenda has included presentations about increased spending on pre-kindergarten programs, new software systems, a trip to Los Angeles for several administrators at Glacier Hills Elementary School to accept an award, and a team of new staff which performs many of its services outside school hours that was hired in an attempt to make minority students and their families “more comfortable.”  
     The district also lost about $9,000 to a parent accused of funneling money from an Eastview High School graduation party account into her adult amusement business, according to the Dakota County District Attorney’s office, an episode that was not discussed by the school board.
     As one administrator said during a presentation about the district’s preschool program, “One of the core pieces that I think we’re most proud of right now is we’ve gone [away from] from community classrooms that were funded 100 percent by tuition [full of] students whose parents could pay full tuition and drive across city, potentially, to get them into a classroom,” Early Childhood Family Services Jenna Ruble told the board.
     Rather than cutting back on administration and other expenses, the administration has focused on increasing revenues. When the legislature was in session, the district posted a plea to parents to contact their state legislators to prevent cuts in state funding. The message implied that, if state funding were cut, the school would need to cut $20 million in student services. The message did not mention the $20 million increase in expenses.
     The increased spending does not appear to be producing an improvement in student scores.
   Fewer than 75 percent of students at all of the city’s six elementary schools were proficient in reading in 2016, according to the Minnesota Department of Education. All the schools, except Northview Elementary, declined from 2013. Although Northview’s reading proficiency increased from 65.4 percent in 2013 to 70.4 percent, it was down from 2015’s reading proficiency level of 72.8 percent.
     District 196 is not the only school district with financial challenges. The superintendent of Shakopee’s school district, Rob Thompson, recently resigned following a financial scandal involving personal use of a district credit card and a $4.5 million budget shortfall, according to media reports.