Duluth school district sees drop in reserve funds

The Duluth school district’s reserve money has dropped again only a year after a large increase and projections of growth.
An independent audit presented to the Duluth School Board Monday showed the unrestricted amount of reserve money - what’s left after revenues and expenditures are realized - at $1.7 million, down from about $3.8 million. The lowest point was reached in 2013, when less than $1 million remained. A longstanding board policy says the fund should hold 10 percent of expenditures, but it’s been years since that has been met, as the balance - short of last year - has dwindled steadily in the face of declining enrollment, for example. It’s recommended that at least one month of expenses - or 8 percent - sit in the fund, said Deb Medlin of accounting firm Wipfli, who presented the report. Right now it sits at 2 percent.
Certain money from the state, such as some for special education costs, hadn’t yet been posted at the close of the year, figuring into the decrease, said Bill Hanson, director of business services.
“Some of it is a timing issue,” he said, noting also that properties up for sale are still being maintained at a cost. “It puts us in a position fund balance-wise of running things closer than we like to. Property sales are key for us going forward, and I can’t emphasize that point enough.”
Properties remaining to be sold are the valuable former Central High School and much of Rockridge Elementary.
In June 2014, the district surplus was projected to rise to more than $9 million in the next year, thanks to increases in state aid and refraining from using the fund to pay down Red Plan debt. At the time, Hanson stressed that the board act conservatively because of the yearly unpredictability of state funding. The sale of properties hadn’t been figured into those projections.
The audit Monday also showed the district underestimated by about $1 million what it was owed in state aid, and that an application for federal Indian Education funding wasn’t submitted on time, meaning $135,000 for the program was lost for the year.
The audit showed the district last year spent $11,716 per pupil, based on average daily membership numbers. That was an increase from 2014 by more than $700 per pupil.
In other news, next week the board will vote on a property tax levy to increase the amount less than 1 percent to $33.15 million. That increase would reduce the school portion amount paid by the owner of a $150,000 home by $16.57. The owner of a $150,000 business would see a reduction of $40.17.