Deficit spending garners little concern

The Princeton school district’s expenses in the 2013-14 school year are projected to exceed the projected revenue by $1.33 million, a figure that all but one school board member at the June 25 board meeting had concerns about.
The information came out during a presentation by Director of Business Services Michelle Czech on the budget for the new school year, based on 3,257 students.
“We’re in the ball park,” Superintendent Julia Espe said about the projected deficit. “It’s $1.2 million (deficit) at Sartell.”
It will mean the district will run into the red by the end of the school year, board member Craig Johnson said.
Czech assured board members that it won’t result in a situation some districts might run into called statutory operating debt, something the Princeton district had years ago.
Board member Jeremy Miller commented that it will mean using some of the district’s fund balance, which has money in reserve to make sure the district always has cash flow.
The district’s general fund balance at the end of 2012 was a little over $13 million.
Board member Chuck Nagle asked how the district was able to do a major addition and remodelling project at North Elementary about two years ago without having to go to the public to seek a construction levy.
No one on the board or in the audience seemed to know the answer for sure. Both Czech and Superintendent Julia Espe begged off, explaining they were new to the district.
North Elementary Principal John Beach, in the audience, only answered that it was a “nice addition.”
Board member Howard Vaillancourt did render one guess, saying he understood there was some kind of “piggy bank” where funds accumulated to do the North Elementary project.
It could have possibly been a building improvement fund, Czech said. She also said the district would have received less money in operating capital had it not run the project.
Board chairperson Deb Ulm didn’t recall there being a building improvement fund.
“Are we setting aside money (for construction) like we did in the past?” board member Chuck Nagle asked?
“Can’t do that,” Johnson said. He added that the district got a lot of money from the district’s operating levy for the North Elementary project.
When Czech and board members talked about the budget for the start up this upcoming fall of all-day, everyday kindergarten in Princeton, Johnson mentioned that the board was able to get the needed $200,000 from moving money around within funds. Therefore, the district didn’t have to borrow to finance the expanded kindergarten program. All-day, everyday kindergarten has only been a option in the past few years for parents who pay a fee. Now it will be offered to all at no extra fee.
Nagle raised concerns about the projected deficit when it came time for the board discussion prior to voting on the budget for the new school year.
“I can’ support a $1.3 million projected deficit,” Nagle said. “I have no problem with the deficit, but I have a problem with no documented plan.”
Nagle added that he is “plenty fine” using the fund balance during the new school year to cover all the expenses but he wanted to the board to discuss how to eventually run a balanced budget.
Vaillancourt recommended Nagle take the request to the board’s finance committee.
“I don’t think it’s possible in education to have a balanced budget,” Johnson responded. One way to deal with it is to raise taxes, he added.
Nagle said he worried that with deficit spending the district could use up its fund balance.
The district is only able to go so far into the fund, Ulm answered.
Miller said that board members could at some point establish a “line in the sand” for how far it could go in deficit spending, but that he felt for now the district is “on an OK trajectory.”
“I think we’re going in the wrong direction,” Nagle said, explaining that he is only looking for the board to have a goal.
When Nagle brought up how the district had been running a surplus, Vaillancourt said the board has been “very fiscally responsible,” and told Nagle that he was “extrapolating” too much from the projected deficit for the new fiscal year.
“I think we’ve been cheapskates,” Johnson responded, offering a different take on the fiscal prudence of Princeton school boards. Johnson explained that he felt the Princeton school boards over the years have been “cheap” in the amount of pay and benefits it has given to the district employees in the lower job classifications. He named janitors and food service workers as examples. “I want to put more money into people’s pockets,” Johnson added.
When the vote came up on the motion for the new budget, board members Johnson, Ulm, Chad Young, Miller and Vaillancourt voted yes and Nagle voted no. Board member Eric Minks was absent.
Elevator bid
The board took action on one other financial matter and that was to approve a bid to upgrade the elevator in the district office building. The winning bidder was Minnesota Elevator,  Inc., based in Mankato, whose bid was for $195,784. The other bid was for $197,469 from All City Elevator, Inc., out of St. Paul.
Minnesota Elevator provided all the proper documentation and All City didn’t, plus All City’s alternate bid, though lower, was of “lesser quality,” Czech said.

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