Finances dog Carlton

Following Monday’s Truth in Taxation hearing, Carlton school board members voted unanimously to set the school district’s payable 2023 levy at just over $1.5 million, down from $1.6 million in 2022. The board adopted the 2022-23 total budget at just over $7 million, with expected revenues at $6.66 million, a projected deficit of $348,101.

While it might come as a relief to taxpayers, a decline of nearly $100,000 (6.14 percent) in the school levy isn’t a good thing for the school district, which seeing increased expenses.

But most revenues are tied to student numbers, so when student numbers go down, so do the tax revenues and state funding, auditor Matt Mayer of BerganKDV explained during Monday’s meeting.

Student enrollment has declined by 18 percent over the past four years, from 507 in 2018 to 415 in 2022. Funding levels have dropped proportionately.

“The one thing that’s been your saving grace has been some of that federal money,” he said, referring to various federal coronavirus relief funds for 2021-2022. But Covid funds will run out, he said. And that means more cuts, and/or other creative solutions, including sharing services with other school districts.

Mayer shared school district audit results for the fiscal year 2022, ending in June 2022, which showed district numbers coming in close to what was planned.

That doesn’t mean the news was all good, just not surprising. Revenues and spending were both higher than expected, both by about $300,000. Additionally, the board chose to spend down the fund balance by $502,000 to make ends meet in 2022. That dropped district reserves from about 19 percent, which was close to the state average, to 12.5 percent.

“Despite some challenges, the district and the school board have done a nice job in maintaining financial health through 2021,” Mayer said. However, when the board voted to use the $500,000, reserves went from $1.6 million to $1.1 million in 2022.

“It would be a significant challenge for the district to take another hit like that in 2023,” Mayer advised the board, adding that “there’s not a lot of fund balance to give any more.”

The school board got a similar message from district financial manager Norman Nelis. Nelis pointed out that the district is out of compliance with its own policy of keeping a fund balance of 15 percent.

“We aren’t in SOD [statutory operating debt], we have the ESSER [Elementary and Secondary School Emergency Relief fund] monies to help keep us out of it for a few years, but over that time I would ask that we make a plan to make the reductions we need to make,” Nelis told the board.