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by Dawn Slade
On Tuesday, Nov. 3, the public will decide if Milaca Public Schools will be able to maintain as is, or if another half-million dollars in cuts will need to be made.
The public can also decide if it would like to reduce classroom sizes, restore and increase course offerings, and develop a long-range plan for financial stability.
The operating referendum is a two-part question on the ballot.
First, the school is seeking a $500 per pupil referendum to cover basic costs to maintain.
“It will allow us to maintain where we are right now,” superintendent Jerry Hansen said.
This does NOT mean a $500 tax increase to residents. The tax increase depends on residents’ property taxes (more on that further in the article).
The second question is seeking residents approval for an additional $200 per pupil revenue increase. This cannot pass unless the $500 referendum is passed.
If the referendum does not pass, the school will either have to cut an additional $600,000 somewhere and/or it will have to dip into the fund balance.
The state recommends the district have a three-month fund balance. The school currently has about a one-month fund balance.
“I’m always hesitant to dip into that,” Hansen said.
There are several reasons the school needs to seek this operating referendum.
One reason is inefficient funding from the state.
A cost of living increase of three percent would help Milaca schools, but it has not been receiving that and Hansen expects what the district receives now is going to remain flat for the next few years.
Another issue is cost shifts.
The school receives an average of about $5,000 per student from the state. The state withholds 10 percent of that money until the end of the year to make sure the student completed the school year in Milaca. So the school does not have access to that money until after the school year ends.
Now, however, the state has decided to withhold 27 percent.
“It’s going to be a paper game,” Hansen said.
By law, the school cannot get paid until the budget is balanced and Hansen is concerned with those funds being in place when it comes time to collect from the state.
“When do we actually get that money?” he questions. “I’m hoping like everyone else that things turn around. But there’s a $4.7 billion shortfall at the state.”
Another reason is the last operating levy was passed in 1994 and it expired in 2004.
What it costs you
Back to the $500 and $200 levies and what that means to residents in the district.
If you own property, this particular tax levy is based on the home, the garage and one surrounding acre of land. It does not include anything else.
So if you own a house and garage on 20 acres with four other outbuildings, you’re only taxed on the house, the garage, and one acre of land — not the other four outbuildings or the other 19 acres of land.
If your home, garage, and one acre is worth $150,000 your taxes will increase $221 for both levies.
That equals just over $18.40 a month or about 60 cents per day.
If your home is worth more, say $200,000, you’re looking at a tax increase of $294 ($24.50 a month or 81 cents per day).
Run it like a business
Hansen often hears people say, “run the school like a business.” And to some degree, they can.
However, a business can raise its rates as the cost of living or overhead costs rise. A school cannot.
“A business doesn’t have to provide a free, good service,” Hansen pointed out. “We have to provide a free and appropriate education. We provide a valuable service.”
But unlike businesses that can generate income with products and services, the schools must get its revenue from the federal and state governments, and resident taxes.
“That’s what makes us different than a business,” Hansen noted.
And unlike counties and cities, the school cannot automatically institute an operating levy.
“In a way it’s frustrating, but it’s understandable,” Hansen said. “It’s a representation of democracy.”
In the past, operating levies were designed for voters to pay for additional items to enhance their school.
Over time, that’s changed. Schools now need to seek operating levies simply to operate.
“It’s not for extra things, but for fundamental operating things,” the superintendent said.
Another issue is decreased enrollment due to home school, private school, open enrollment (nearly 11 percent of the students who left Milaca schools enrolled in online courses) and decreased birth rates.
If there’s less students, there’s less money from the state.
In the 2008-09 school year, Milaca lost 58 students, which equals just over $340,000.
It might seem that with less students, it would cost the school less to operate.
“Well if all those kids were in third grade, we’d lay off a third grade teacher. But they’re spread out over the entire district,” Hansen pointed out.
If you lose five kids in fifth grade, you’re likely going to need the same number of teachers. And the electricity, the heat and other overhead costs remain in place.
“We still have to carry that staff and other overhead costs,” he added.
Since 2004, the school has cut 21 teachers, 15 paraprofessionals, and others equalling six full-time staff (42 staff members in five years).
Activity and admission fees, school lunch fees, and community ed fees have increased bringing in just over $79,000.
So why not increase activity fees more or have parents pay for the activity in its entirety?
At the current rate of 40 percent participation in after-school activities, the activity fees for parents would increase to approximately $887 per student, per activity, if the parents were to foot the entire bill. That could make it cost prohibitive for most families.
Hansen knows that if they were to do that, even more parents would take their kids out of Milaca — again decreasing revenue for the school.
Myth busters
In addition to holding meetings, the superintendent has put together information called “Milaca Myth Buster” that is available on the school’s Web site (from the home page, click on the voter information, Milaca Myth Buster is on the left side).
His myth buster “fact or fiction” sheets tackle rumors surrounding open enrollment, combining with other districts, Q-Comp, teacher contracts, land purchased for a future school, substitute teachers pay, athletics, administrative salaries, in-town bussing, and OPEB bonds.
To address a couple of these, the claim that Milaca spends more on administrative salaries and has more administrators than other districts....Hansen points out that according to the Minnesota Department of Education, Milaca spent an average of $269 per student on district level administration. The state average is $395.
School level administration equates to $349 per student in Milaca while the state average is $385 per student.
Average wages for Milaca’s administrators are comparable to surrounding districts. Salaries amount to less than those in Foley, North Branch, Braham, Princeton, and Cambridge-Isanti. And they are slightly higher than in Isle.
School administrators are still looking at a possible four-day week, but at this point the savings would be primarily in transportation (about $175,000 in savings).
Hansen said they are monitoring other districts, like Ogilvie, to obtain more data.
The superintendent strongly believes Milaca and other East Central districts need to have a stronger voice at the State Capital.
“We need to become more educated on school finances, the impact it has, and bring that to St. Paul,” he said.
It speaks volumes to legislators, he said, when parents get before congress and tell them that their child has the same right to a quality education as any other student in the state.
Hansen has held several informational meetings regarding the school finances and will have three more today (Thursday) at 8 a.m. and 2 p.m. in the Dahlager Theatre, and 6:30 p.m. in the high school media
center.
While Hansen won’t speculate as to how the vote will go, he did say people (on both sides) have told him they appreciate understanding the financial aspect of the school and the state.
The decision to seek the operating levy was based on community input at prior meetings; past, current, and projected budget deficits; and the impact more cuts would have on students and the community.
If the referendum does not pass, there will need to be yearly budget cuts, which will include increased class sizes and loss of programs.
Hansen’s goals include creating a premier district that will attract more students, offering more courses including college courses (saving parents money). He wants to organize a parent/community group to work with local state Representatives and Senators to lobby and testify in St. Paul for equitable and sufficient state funding.
And, he wants to bring the fund balance back to where it needs to be.
“So when there’s another change, we can weather the storm,” he said.
Editor’s note: Absentee ballots can be obtained from the school. The notice of special election form sent to residents is NOT a ballot.
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