Duluth school district's reserves increase slightly
The Duluth school district's reserves have increased, but still fall well below a minimum amount required by a longstanding School Board policy. An independent audit presented to the board Monday shows that the unrestricted amount of reserve mone...
The Duluth school district's reserves have increased, but still fall well below a minimum amount required by a longstanding School Board policy.
An independent audit presented to the board Monday shows that the unrestricted amount of reserve money - what remains after revenues and expenditures are realized - sits at about $2.4 million, up from $1.7 million last year. The board policy - set nearly 20 years ago - says that 10 percent of district expenditures should be held, but that amount hasn't been realized for several years. It is at 2 percent today; the same percentage as last year. Deborah Medlin of accounting firm Wiplfi, who presented the audit, said she recommended that a minimum of 8 percent, or one month of expenses, remain for cash flow.
A fund balance that at one time was more than $10 million (with an even larger restricted balance, bringing the total to well over $25 million), has been spent down through the years as enrollment and state aid declined. In more recent years, as that money was used to help pay long-range facilities plan debt, it declined further, until property taxes were raised to avoid falling into statutory operating debt.
Medlin pointed out to the board that it spent $1.1 million of reserves to balance its latest budget.
The only way to increase that reserve amount, she said, is to pass a balanced budget or one with a surplus.
The district counts on selling remaining properties - collectively valued at about $15 million - left over from the long-range plan to replenish reserves. The board has had several offers fall through from housing developers, and has controversially opted against selling to other K-12 schools both public and private who have come with offers.
To meet the board policy goal under its current budget, about $9.4 million should be left in reserve.
The audit also showed that the district in 2015 spent more per pupil than the state average, at $11,340. The state average was $10,878. That number depends on several factors, including transportation costs when considering the geography of a district, the extent of special education costs and the experience and education level of teachers, for example.
Medlin told the board that it is not in the business of making money, and it could be argued that taxpayers might view a multi-million dollar reserve fund as being overcharged.
But enough for cash flow is important, she said.