A sharp enrollment decrease led to a 2020-21 budget revision for Brainerd Public Schools and a larger deficit than expected.

School board members approved the revision at their meeting Monday, Jan. 25, after hearing the district lost more than 300 students from the 2019-20 to 2020-21 school year, likely due largely to the effects of COVID-19.

The preliminary budget estimated a 2020-21 enrollment of 6,491.9 adjusted pupil units, based on the year-end enrollment for 2019-20. Pupil units are tied to funding and are calculated by weighting students in kindergarten through sixth grade at 1.0 and students in seventh through 12th grades at 1.2. This number factors into the district’s levy capabilities, as school districts are allowed to levy up to $724 per pupil unit.

The enrollment projection for 2020-21 was updated in the revised budget based on two important factors: an actual known year-end enrollment for 2019-20 and actual known student counts for the beginning of the 2020-21 school year as of Oct. 1. Using this updated information, enrollment can be more accurately projected for year-end 2020-21 and compared against the projected enrollment used for the preliminary 2021 budget.

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The actual ending enrollment for the 2019-20 school year was 6,527.1 adjusted pupil units. Taking into account the size difference between the graduating senior class of 2020 and the incoming kindergarten class, along with a projected decrease in pre-kindergarten students and a decrease in migration between grades, the new projected 2020-21 enrollment is 6,194 adjusted pupil units, which is a roughly 5% decrease from 2019-20. Marci Lord, director of business services, described the migration between grades as students who finish out the year but don’t show up on the roster for the subsequent grade next year. For example, if a school ends the year with 20 first graders, the expectation would be to see 20 second graders next year, but that isn’t always the case, due to reasons like students switching schools or being held back.

Lord said one reason the enrollment number changed so much is due to the size of the 2020-21 kindergarten class, which was estimated at 450 but ended up being less than 400. Lord said she assumes that decrease may be from parents choosing to hold students back a year due to COVID-19. The district also lost about 100 students to homeschooling this year, likely for COVID-19 reasons as well.

A budget deficit

At Monday’s meeting, Lord walked the board members through the budget revisions, which include a $2.7 million deficit in the district’s general fund. That number isn’t quite as alarming as it seems, with much of that deficit coming from long-term facilities maintenance revenue, which was set aside for the bond referendum construction projects.

But there is still a spending deficit of just over $1 million in the unassigned general fund, which is essentially the district’s “rainy day fund.” Those funds can be used for anything in the district without restriction.

"We haven’t seen a loss of that many kids since I’ve been here — which isn’t that long — but even historically, I don’t think we’ve seen that many. So what’s next year going to look like?"

— Marci Lord, director of business services

“That’s going to hurt us,” Lord said during a phone interview Thursday, Jan. 28.

The projected ending balance for the unassigned general fund is about $6.6 million, which is 7.26% of the district’s operating budget, or less than one month of expenses. The state recommends districts have about 25% of yearly expenses in the unassigned fund, but the district’s policy calls for just 5-7%. That’s a policy Lord has said she would like to revisit in the future.

Board Chair Bob Nystrom said he would like to see the unassigned fund up closer to 10%.

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“One thing this pandemic has shown us is that we have to have a larger fund balance because what we have right now would not last very long if we weren’t getting help in CARES (Coronavirus Aid, Relief, and Economic Security Act) funds from the federal and state government,” he said during Monday’s meeting. “So this is something we will bring up for discussion at a later date.”

The district has used about $1.17 million in COVID-19 relief funds so far, and Superintendent Laine Larson remained optimistic more could be coming.

“We have been told that there’s quite a large sum of money coming to education from the federal government,” she said at the meeting. “We’ve seen a number, but it hasn’t been allotted at this point. If that occurs, that could be helpful. I mean, it’s got to occur because there are school districts in worse shape than we are because of what has happened with COVID and this pandemic.”

She also mentioned Gov. Tim Walz’s “Due North” plan, unveiled earlier this week as an effort to make sure every student in Minnesota receives a high-quality education, no matter their race or ZIP code. The plan carries with it seven priorities and will likely include funding for districts, but that sum is unknown.

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Budget revision

The preliminary 2021 budget included assumptions in terms of state and federal funding, enrollment numbers and staffing costs. As the year progresses, revenue and expenses that were previously estimated can be revised with new or updated assumptions. Those new assumptions for the revised 2021 budget include:

  • A decrease in enrollment of about 333 adjusted pupil units from 2019-20 to 2020-21.

  • Updated federal and state funding, including funds from the Coronavirus Aid, Relief and Economic Security Act.

  • Added student activity revenue and expenses.

  • A decrease in Medical Assistance billing revenue.

  • An increase in miscellaneous revenue (donations, rebates, etc.).

  • Updated expenses with settled labor agreements and staffing changes.

  • Updated staff development to add carryover professional development funds not used last year.

  • Updated long-term facilities maintenance expenses based on projected activity.

Going forward

A second budget revision could come later in the year, Lord said, if there is an updated payment plan from ICS for the building projects that is substantially different from the previous plan. New debt issuance for the projects could trigger another budget revision as well.

“There is concern,” Lord said Thursday of the budget as a whole. “We’re thankful that it’s not worse than what it was — or is — because we did get the federal money, the CARES money. … Going into next year, we’re going to have to try to figure out what we are going to use for estimates because this year was like no other. We haven’t seen a loss of that many kids since I’ve been here — which isn’t that long — but even historically, I don’t think we’ve seen that many. So what’s next year going to look like?”

THERESA BOURKE may be reached at theresa.bourke@brainerddispatch.com or 218-855-5860. Follow her on Twitter at www.twitter.com/DispatchTheresa.