Covid, inflation pressures impact school budget

Not surprisingly, the Covid-19 pandemic impacted lives in a wide variety of ways. One aspect the pandemic has unexpectedly continued to affect is school finance, Cloquet superintendent Michael Cary told school board members Monday.

While student numbers had been rising slowly but steadily before the pandemic, they have failed to rebound after students returned to in-person classes. Fewer students means less funding from the state of Minnesota.

Additionally, inflation — blamed in part on supply shortages caused by the pandemic — is getting in the way of contract negotiations, he said, referring to the ongoing paraprofessional and secretarial staff talks. It’s caused a ripple effect.

“People are feeling the pinch of inflationary increases,” Cary told the board, explaining that negotiators were asking for wage increases basically in line with inflation. “It’s completely understandable they’re coming in with these requests, but when the district only gets 2 percent from the state in new money, turning around and giving out 5 to 7 percent plus other additions is something that would put us in the red extremely quickly.”

They are working to come to an agreement, Cary said, but he worries that they are still a long way apart.

“As a school district, we get wedged between the decisions the state legislature makes, and our own local people who work and support our kids,” he continued. “They do great work. But when the legislature gives us money that doesn’t come anywhere near inflation this year, and they sit on a $9 billion surplus and don’t get business done, it puts us in a really tough spot.”

The financial worries extended to next year’s budget later in the meeting.

Taking into account budget adjustments made in May, board members passed a budget that included a total projected deficit of $704,000, as presented by business manager Candace Nelis.

Nearly $514,000 of that deficit is predicted for the unassigned general fund, which includes salaries, benefits and most items administrators and school board members have more control over, versus items such as food services, transportation and long-term facilities maintenance.

As he has before, Cary made the point that the district is very conservative when calculating revenues and expenditures, which normally means that $300,000 to $400,000 in predicted deficits either don’t materialize or are vastly reduced by the end of the school year. However, he said, with inflation and post-Covid uncertainties, he’s a little less certain this year.

“This is the first time since I’ve been here that we’ve downgraded the number of students,” Cary said. He had hoped the past school year would be more normal, which it was, but it wasn’t back to normal.

“As we phase out this thing, [I’m hoping] we get to a spot where we can a little more accurately and confidently predict what we think it will look like from year to year. But the past few years, it’s been a little more of a guessing game.”

Deficit spending does not mean the district would be in the red. The current fund balance in the unassigned general fund is $4.8 million.

In other matters Tuesday, the school board:

-Approved hiring Kennedy Firkus-Houge as head coach for the girls hockey program;

-Approved election filings for Aug. 2-16 for board seats held by Ted Lammi, Dave Battaglia and Gary Huard. The election will be held Nov. 8.