Duluth school district avoids layoffs, but cuts still must be made
An enrollment adjustment that arrived in the nick of time will save the Duluth school district from making mid-year layoffs.
While the district's audit for last year — presented last week — showed a nearly $500,000 deficit, the state sent a $600,000 enrollment adjustment for that same year on Friday, putting the district back in the black for that year's budget. Had that not happened, the district was facing a $2 million shortfall for the current year that if not addressed, would probably lead the district into statutory operating debt.
The district last week — before it knew of the new revenue — said it would save $1.3 million by delaying projects and purchases, and proposed every employee take two days of voluntary unpaid leave to cover the remaining $645,000. If employees didn't support that, layoffs were planned. At Tuesday's School Board meeting superintendent Bill Gronseth announced the voluntary leave option and layoffs were off the table. He also announced the unexpected revenue.
Duluth Federation of Teachers president Bernie Burnham said Tuesday the union had not supported the furlough proposal.
"We're thankful the crisis has been averted," Burnham said Tuesday night, but employees don't want to face that rushed process again. Employees were notified Friday of the proposal and were sent a survey Monday that asked for support.
The message from administration that employees can show the community they care by taking the voluntary leave "offended" many employees, Burnham said.
"It truly pit folks against one another, intentional or not," she said, her speech drawing a standing ovation from the packed board room.
Homecroft Elementary teacher Elizabeth Kersting-Peterson said teachers are "the center of gravity for some of our students."
"We give more than some think (is) sensible," she said. "Financial issues of the district are not a result of anything we have done. We continue to do more with less because we care."
The $2 million deficit to the current year's budget still exists, but part of it can be shifted into next year's budget. That's possible because the additional revenue for enrollment pulls the district further away from statutory operating debt, which comes when a district's deficit amounts to 2.5 percent of its annual expenses. Now it sits at less than 1 percent.
At Tuesday's board meeting, about $1.6 million in savings was released, with the idea that the remaining $400,000 will be a deficit dealt with during the next budget season, adding to an already-expected but unknown shortfall.
Those savings include unfilled positions, cuts to department and staff development budgets, delaying the telepresence project at the high schools and an expected property sale of $300,000, which is for some of its land near Hartley Park.
Gronseth said the short timeline given to make adjustments made the process "messy," and he assured employees that he appreciated them and the work that they do.
In explaining the new revenue, he said the audit "captured a moment in time" of the district's finances, and the adjustment was unexpected but not unusual.
"It's not something I bring to you easily or lightly," Gronseth said of the cuts. "This allows us some time to breathe ... and come up with creative solutions."
Several board members asked for a plan to address long-term financial stability.
"We are in a tough situation moving forward," member Alanna Oswald said, praising the sacrifices schools made and the work done to avoid layoffs. "I will support this with the expectation that after break we hit it hard to address these cuts." The board approved the budget changes 6-0 with one abstention from member Art Johnston. The special meeting that had been scheduled for Thursday to deal with layoffs was canceled.
The furlough proposition
Burnham earlier Tuesday said employees were given three options for their two days off — days school was not in session — and would not be allowed to choose their own days. But contracts allow for choice in that situation, Burnham said, and the financial loss would be substantial for teachers near retirement and for newer teachers.
"It might be a portion of a student loan payment. If you have kids at home and are single, that might be grocery money, gas money, rent money," Burnham said. "And we weren't just looking at teachers," but also clerical, hourly and paraprofessional employees, many of whom work multiple jobs.
The shortfall, if caused by government funding decisions, she said, shouldn't be solved "on the backs of employees."
The district has said a special education funding formula change was a large contributor to its deficit.
More than 100 of the nearly 700 DFT members attended a meeting Monday night and voted unanimously to reject the employee survey that was sent Monday, Burnham said.
The board also approved two resolutions — one for the state and one for the federal government — asking that special education services be fully funded.
Districts across the state regularly pay money from their general funds to cover special education costs not paid by the state and federal governments. In 2016, Duluth paid $9 million from its general fund to cover unreimbursed costs.
The board approved the tax levy, which decreases by less than 1 percent to roughly $31.7 million. The decline comes from a reduction in the debt service levy, attributed to the district's bond refinancing.