Ahead of the April 6 School Board Meeting

The district’s 5-year budget forecast is included within the referendum renewal materials that the School Board will be discussing on April 6.

Like many in our community, I don’t work in school finance every day. As a small business owner, I have to take the time to work through these documents carefully to understand what they actually mean.

If you’re interested, I encourage you to:

• Review the documents
• Ask questions
• Or participate in the public forum at the meeting

📄 View the Referendum Document

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🧠 First—Understanding the Terms

One of the first things I had to look up was this line in the forecast:

“E.O.Y. APU’s”

If you’ve followed my previous posts, you’ve likely seen ADM used instead. These are similar, but not the same.

📊 ADM (Average Daily Membership)

• The actual number of students
• Adjusted for attendance
  👉 Think: How many students do we serve?

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⚖️ APU (Adjusted Pupil Units)

• A weighted version of students used for funding
• Based on grade level (older students generate more funding)

👉 Think: How much funding do our students generate?

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💡 Why this matters

APU tells us how we’re funded. ADM tells us how many students we serve.

Both matter—and looking at only one can give an incomplete picture.

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🧮 What Does “Plan Change Needed” Mean?

This is one of the most important lines in the entire document.

Plan Change Needed =
The adjustment required (through revenue, spending, or both) to return to the district’s 8% fund balance target

👉 It is not just the yearly deficit
👉 It shows how far we are from the target over time

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📉 Breaking It Down Simply

The district has a policy to maintain:

👉 8% unassigned fund balance

That equals roughly:

• 2028 goal: ~$11.0M
• 2029 goal: ~$11.4M
• 2030 goal: ~$11.8M
• 2031 goal: ~$12.3M

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📊 What the forecast shows

• 2028: $6.7M
• 2029: –$4.4M
• 2030: –$19.1M
• 2031: –$35.0M

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🧠 What that means

Example (2028):

• Goal: $11.0M
• Actual: $6.7M

👉 Gap: –$4.36M

That gap is what shows up as:

Plan Change Needed: –$4,361,202

Example: 2031 (this is the big one)

• Goal: $12.3M
• Actual: –$35.0M

👉 Gap =
$12.3M – (–$35.0M) = $47.3M

✔️ That matches:

–$47,326,291

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💡 The key takeaway

This number doesn’t fix the trajectory—it shows how far we are from our target given our current path.

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⚖️ Is 8% Required by the State?

No.

Minnesota does not require districts to maintain an 8% fund balance.

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🚨 What the state actually requires

A district enters Statutory Operating Debt (SOD) when:

👉 Fund balance drops below –2.5%

At that point:

• The state requires a recovery plan
• Oversight increases

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📊 So what is 8%?

👉 It is a local policy target

Districts choose targets like:

• 8%
• 10%
• 12–15%

Based on:

• Financial best practices
• Auditor recommendations
• Risk tolerance

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🧠 Why fund balance matters

An 8% fund balance is roughly:

👉 About one month of operating expenses

It helps districts:

• Handle unexpected costs
• Manage enrollment changes
• Maintain stable operations
• Protect financial standing

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📉 What the forecast shows

From the current projection:

• Falls below 8% by 2028
• Turns negative by 2029
• Reaches –22.8% by 2031

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🎯 What that means

• 8% = early warning
• –2.5% = state intervention
• The forecast crosses both

💰 Fund Balance: From Healthy to Concerning

The district sets a goal to maintain an 8% fund balance (a financial safety cushion).

Here’s what the forecast shows:

• Today: ~14% (healthy)
• 2028: falls below target
• 2029+: turns negative
• 2031: about –22.8%

👉 Translation:
Without changes, reserves are eventually exhausted and the district enters statutory operating debt.

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🧠 Final Thought

Financial documents like this can be difficult to interpret—but they are critical to understanding the decisions in front of us.

This forecast is not a final outcome. It is a projection based on current assumptions.

But it does highlight something important:

Without changes, the current financial path is not sustainable.

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📣 Invitation

If you have questions or thoughts, I encourage you to:

• Attend the April 6 meeting
• Participate in public comment
• Or continue the conversation in the community

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