April 5, 1999

In the Net

1.I recently received the latest Education Minnesota Negotiations Bulletin. This installment deals with analysis of school district financial conditions. As we are presently working with the research people at Education Minnesota to develop an overall assessment of our school district, I was tempted to put the material aside. I decided to take a quick glance at the information presented. I’m glad that I did.

What I found to be most interesting was a series of pages comparing the net operating fund balances of the school districts across the state. The net operating fund balance is defined by statute as follows. "Net unappropriated operating fund balance means the sum of fund balances in the general, food services, and community service funds minus the balances reserved for statutory operating debt reduction, bus purchase, severance pay, taconite, re-employment insurance, maintain levy reduction, operating capital, disabled access, health and safety, and encumbrances, computed as of June 30 each year." For those of you without time to read further, let’s go straight to the point. On the basis of this state-wide comparison Duluth looks good…really good.

Let me qualify what will follow by saying that the comparison is many pages long with hundreds of districts listed. I may have missed something. If so, I apologize in advance.

The school districts are in alphabetical order and have the following information given for the years ‘95’,’96,’’97,’98---Net Operating Fund Balance (Net Op. FB), Fund Balance per Pupil Unit (FB per PU), and Rank per Pupil Unit (Rank per PU) for each of these years. There is little point in going through the entire listing. I picked out some of the more interesting districts and information.

As of June 30, 98

District NetUnapOp.FB     FB/PU     Rank /PU                                                                 

Duluth   $17,428,802         1168         69

Gr.Rapids  1,950,544         363             283   

Hibbing     2,599,047             694          184

Lk Sup.     4,320,730 1            703     23

An-Hennip 18,067,168            405    274

Mpls             39,544,788              739    168

Osseo         12,289,739              499    256

Rochester   13,279,001              762    162

Rosemnt.      19,671,319            646    199

S Wash. Co. 10,166,041              618      211

St.Paul     26,877,131              536    245

Bloom.     14,473,836              1113    76

Wayzata     8,681,605              889     127

St.Cloud     7,310,294              566       234

Although this is not a complete listing of all 400 plus districts, I think that we can see some interesting comparisons. Unless I missed something, 2.Duluth has the fifth largest fund balance in the state. Among the large districts Duluth has the highest fund balance per pupil unit, and is ranked 69th. The highest ranked school district listed is Pine Point which is ranked three with a Net Operating Fund Balance per UP of $8010 and a total Net Operating Fund Balance of $512,265. Pine Point has 124 students. Last year they were number one per pupil unit. The number one and two districts for this year were not listed.

I’ve been told that one of them actually has its students educated in North Dakota. The districts which rank above Duluth in per pupil unit balances are all much smaller. The districts to which we are compared are the large school districts. I did not find any ranking better in the comparison of balances per pupil unit among the big districts.

As I stated earlier, Duluth has the 5th largest total fund balance. Combining this with the highest ranking per UP one could easily make the argument that this school district is top among the large school districts in the state. 3.The positive financial condition of I.S.D. No. 709 has been improving over the past several years. As recently as 1995, Duluth had a Net Unapp. Op. FB of -$46,922, with -$3 per UP, and a per UP rank of 327. By June 30 of 1996 the figures had improved to $8,097,482…519…and 219 respectively. June of 1997 found the district with $14,214,944…910…and83rd in per UP rank. Today the Net unappropriated Operating Fund balance is nearly $17.5 million and building.

We have all read the newspaper accounts of how the recent contract settlement would require program cuts. The school board is presently pleading poverty. How does one explain the financial problems in light of the state report? I really don’t know. In the Net (unappropriated Operating Fund Balance) scheme of things Duluth seems to be in very good shape indeed.

Frank Wanner, President

My Response:

1.Frank is treating this information as though it were a great revelation to him. It’s not. Almost a year ago Frank sent an accusatory letter about this very subject to our finance director. The information Frank is referring to is just an annual update that shows that Duluth has a better budget reserve than many other school districts. This is not news to anyone who read the newspaper throughout the recently concluded contract negotiations. However, by listing all this "authoritative information" with its intimidating acronyms Frank leaves the confused reader with the impression that somehow the Duluth School Board is holding out on the teachers. This is what our teachers have been told for years and it is wrong.

Last year, after reading Frank’s letter on this subject, I spent days on the phone with the finance people of the State CFL (Education) Dept. to make sense of the budget info and all those annoying acronyms.


























2.So what? Frank doesn't deny that we anticipate having 1.9 million more in expenses this year than revenue. That's a deficit. At 17 million dollars our reserve accounts for less than two months spending. It could be gone in a wink if not protected.












3.Not any more. When Frank says it is growing he is grossly wrong. We will soon cut 1.9 million out of our budget reserves to pay for the new contracts.

Here's our budget history. A few years ago we had a substantial debt at 5.5 million dollars and we were paying lenders to borrow money to meet our expenses. How did it become a reserve? The voters approved an excess levy referendum in 1993 which the School Board pledged to use to pay off the debt and build a ten percent reserve. The School Board kept its promise. Frank wants this money but he wants to avoid blame for putting the school district in debt. He would prefer to blame a new debt on School Board mismanagement. Our teachers suffer with lower salaries and reduced staff when we don't have a reserve.