With inflation, rising expenses and dwindling student enrollment threatening to eat up the St. Peter School District’s cash reserves, the School Board met for a special meeting April 29 to approve a two-year budget plan to keep the district’s unassigned general fund balance in the positive.
The budget adjustment plan, which makes $3.3 million in adjustments to the general fund through cost reductions and budget reorganization, was assembled by school administration after a report last month showed the St. Peter School District was on track to run a $3.3 million deficit over the next two years.
If left unchecked, the deficit was projected to plunge the district’s unassigned fund balance into a $12,000 deficit by June 30, 2025. Unassigned funds serve as a cushion for the school district to assist with paying expenses during uneven months, and as a cash reserve in case of emergency.
Under the recently passed budget adjustment plan, the district predicts that it will be able to balance the $1.1 million deficit facing the district this fiscal year, while adding $80,000 to its reserves, leaving the district with $3.4 million in its balance — enough to fund the district’s daily operations for 45 days.
“The administrative team has put a lot of time and effort into creatively being able to address the deficit while keeping our priorities in mind — really focusing in on individual services to students and equity and interventions and keeping as many options available to our students as possible,” said St. Peter School District Superintendent Bill Gronseth.
Much of the adjustments for the immediate fiscal year come from the district reassigning funding sources for various staff positions away from the unassigned general fund. The most significant change in the budget is the movement of $835,000 from the district’s assigned fund balance to its unassigned fund balance.
This funding was previously meant to be transferred to the unassigned fund balance, but it was put on hold to account for unanticipated costs that could arise during the middle school renovations supported by the Mend the Middle referendum.
To balance the steeper $2.2 million deficit facing the district in 2025, the district has moved to cut several staff positions and refrain from filling staff vacancies. At its April 29 meeting, the School Board voted to eliminate a technology specialist position added during the COVID-19 pandemic, as well as an office support position. The School Board also voted not to renew a contract with a non-tenured middle school science teacher and to reduce the hours of a middle school math teacher.
At the high school level, the plan reduces the budget by $343,000 by cutting 3.3 full-time equivalent staff positions. Gronseth said these reductions were made by cutting sections of the high school’s less popular classes and by splitting teacher hours between the high school and Oshawa Learning Academy, which has a different funding source.
“It’s not necessarily that they don’t have a job; it’s that the job is split between two sites,” said Gronseth.
In addition, the plan calls for the district not to fill a vacant reading intervention position and health paraprofessional position at North Elementary and the position of a fifth- and sixth-grade band instructor at St. Peter Middle School. The latter cut would result in the fifth-grade band program being eliminated, while the 7-12 band program would be reorganized to include sixth graders.
“The teacher is retiring at the end of the year, so with any positions that are vacant, we really looked at how we could reorganize, and this is something that we have considered before programmatically, so it seems like the right time to make that move,” Gronseth said on the decision to cut the fifth-grade band program.
The St. Peter School District has also tightened its belt by combining the interim South Elementary principal and Oshawa Learning Academy principal into a singular position to be held by Rock Bend Principal Jana Sykora.
The planned cuts further include the elimination of one of the two sections at the Rock Bend Alternative Learning Center. Gronseth said there has been less of a need for alternative learning center instruction after Rock Bend expanded to two sections during the COVID-19 pandemic.
The cuts have the potential to reduce the program’s capacity by 13-15 students, but Gronseth said the district was also exploring different models of programming that would allow Rock Bend to retain its 25-student capacity with one teacher.
“We have seen more students taking our credit recovery opportunities for after school programs, and so there hasn’t been as direct a need for ALC,” said Gronseth. “But we’re also looking at different models of programming at the ALC where we would be able to serve the students with one teacher, looking at the possibility of hybrid scheduling.”
The totality of adjustments is estimated to offset just over $2 million of the $2.2 million deficit. The remaining $190,000 would be pulled from the district’s unassigned general fund reserve. This would leave the district with $3.17 million remaining in its unassigned general fund reserves, enough to fund the school district for 43 days.
While the plan aims to keep the district’s books balanced for the next two years, the district isn’t out of the hole just yet. Without increased revenues from the state, the district predicts that an additional $1.45 million in adjustments will be needed to counter a continued deficit.
St. Peter’s continued financial difficulties are linked to the district’s ongoing challenges with expenses continuing to rise, while student enrollment is expected to plummet. Come next year, the district’s average daily membership is expected to drop by 50 students, reducing the dollars available to the district through the state’s funding formula.
“The funding level we get at the state isn’t keeping pace with that inflation. We also have declining enrollment. Based on the enrollment study we had last year, we just had fewer school-aged children in our region,” said Gronseth. “So as long as we have declining enrollment, and state funding not keeping pace with inflation, we’ll have to keep making adjustments.”
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