NRHEG looks at funding from many angles

During their June 15 meeting, members of the NRHEG School Board heard from district business manager Karla Christopherson regarding an anticipated $600,000 loss to the $4 million “general fund,” a pool of money set aside at the recommendation of various advisement groups as a buffer to meet expenses if sources of income–including money from state and federal agencies–are late or slow in providing promised funding. 

 

Christopherson summarized that, as the 2025-26 school year comes to a close as of June 30, the district will have had about $432,000 more in expenditures than it had in income. In looking at the proposed 2026-27 budget, Christopherson predicts expenditures $166,000 higher than income.

 

The district’s operating budget for 2025-26 was about $40,000 short of $14 million. The budget for 2026-27 anticipates about $18,000 more in expenditures.

 

The shortfalls, it has been explained in various conversations, come about because of numerous intertwining factors that include declining student enrollment which results in less money from the state, as well as programs and services the district is required to provide even though it is not always reimbursed for its costs.

 

The district has a policy that its general fund should be an amount between 22 and 28 percent of its annual operating costs. Though the $432,000 decrease is the largest in recent history, circumstances described above have led to consistent budget deficits for the last few years.

 

“A declining general fund is something everyone in the district should be worried about,” observed board chair Rick Schultz.

 

The group’s concerns led to a brief discussion about the steps needed to ask the public for an “operating levy,” an increase to property taxes designated specifically for support of the school district. According to information on the Minnesota Department of Education website, of 330 school districts statewide, about 240 are already utilizing this source of funding.

 

Another major item of business on the June 15 agenda was accepting an offer on the property located at 302 Broadway Avenue South. The district purchased the property last fall as a way to deal with the longstanding circumstance that a garage associated with the residential lot extended about 6 feet into school property, reducing the space available at a driveway from the school’s newly refurbished parking lot onto Minnesota Highway 30. At that time, repeated conversations with the homeowner had not led to a solution, so when the property came up for sale, the district purchased it for roughly $70,000. During the school year, the garage was removed, creating a more open access between the lot and Highway 30.

 

During the June 15 meeting, board members officially accepted an offer of $40,000 to be paid in cash for the property. While board members acknowledged the $30,000 difference, Schultz pointed out that, given previous discussions with the property owner had been unsuccessful, legal action to compel the removal of the garage would probably have cost at least that amount.

 

He also referred to the improved access, stating that “if we prevented even one accident, we made a good investment.”

 

Also during the June 15 meeting, Christopherson summarized a ballot item which will be decided during the Nov. 3 statewide vote.

 

She explained that, when Minnesota became a state, lawmakers stipulated in its constitution that land would be put under state control for the sake of helping support schools. She summarized that, at this time, about 2.5 million acres of land are managed by the state Department of Natural Resources. Income from that land is set aside in a fund; interest paid on that fund supports a number of state initiatives, including providing operating money to schools.

 

The fund, she said, has grown to be larger than lawmakers in the 1800s could have anticipated, and so significant amounts of money are not being distributed thanks to elements of the formula set down in the state constitution. Since changes to the constitution must be authorized by a general vote, this question will be appearing on the November ballot:  “Shall the Minnesota Constitution be amended to increase the funding going to all school districts from the permanent school fund, which is a fund that supports school districts without raising individual income or property taxes, effective July 1, 2027?” 

 

If the amendment is approved, Christopherson said, NRHEG would receive about $21,000 more in state funding in 2027 than in 2026.

 

Board members also carried out a conversation regarding the district’s unemployment costs. Prior to 2024, school employees whose contracts did not include summer pay were not eligible for unemployment benefits. After a change to the law, people such as paraprofessionals, food service workers and bus drivers became eligible to apply. Teachers do not receive unemployment; their wages are an annual salary divided out across all 12 months of the year.

 

At the time the change was implemented, lawmakers set aside about $135 million to cover the statewide costs to school districts, so that the money would not come from their operating budgets. That fund is meant to continue through the summer of 2027, or until it is exhausted.

Christopherson informed board members that NRHEG employees are expected to receive about $100,000 in unemployment benefits this summer.