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HLWW schedules referendum
June 28, 2019

Deb Cox-Johnson

HOWARD LAKE, WAVERLY, WINSTED, MN – Howard Lake-Waverly-Winsted (HLWW) School board, during the work session June 24, adopted a resolution to request additional funds from voters in a special election to take place in November.

The referendum will pose two questions to voters. The first question will ask for approval for an operating levy that would provide funding of approximately $346,300 per year, or $320.55 per student, per year. This represents an increase of $250 per student over the 2009 levy of $70.55.

The second question will ask voters to approve a capital project levy of $200,000 per year for technology and related curriculum.

If approved, the levies would each be for 10 years.

The last operating levy referendum took place in 2009. The current operating levy request includes cancelling the last year of that levy so that the new levy may take effect in 2020, rather than 2021.

State funding has not kept up with inflation

One of the primary reasons the board decided to make these requests is that state funding per student has not kept up with inflation. Recently, the state legislature voted for a 2 percent increase in this funding, as it has done for the previous three years, beginning in 2016.

It was noted that prior to that, however, the legislature failed to approve an increase that matched the inflation rate in six out of the 10 years beginning in 2009. The result is that state funding has cumulatively increased by approximately 15 percent during that period, while the actual cumulative inflation rate was over 19 percent for the same period.

This funding gap is affecting numerous schools across the state, including a significant number in nearby districts. Tom Melcher, director of the program finance division at the Minnesota Department of Education, was recently heard commenting that, at most events he attends across the state, a majority of districts are anticipating cuts in the next one-to-two years if no new local funding is approved.

Additional budget pressures

Technology and related curriculum needs have taken on increased importance. More computers, Chromebooks, Smart boards, and related curriculum are in use today. Technology acquisitions, maintenance, and upgrades have, to-date, been funded from the general operating expense budget. Over the last few years, the district has spent approximately $200,000 per year on technology and curriculum. According to Superintendent Brad Sellner, approval of the capital levy for technology would ease the impact of future investments and expenses, and prevent the need for hard choices between current technology/curriculum needs at the expense of other programs or activities.

Another area in which the needs and costs have greatly exceeded earlier expectations has been special education. The number of students in special education has increased over the years. State funding has not kept up with increasing number of students, nor with the costs to provide a level of services that meet the needs of students.

In the area of special education, the funding gap has been even more dramatic. Special education costs and expenditures have increased by 57 percent since 2009. Comparing the period 2009-12 to 2016-18, the school district’s “net cross subsidy” for special education has increased approximately 50 percent from an average of $645,666 to an average of $966,873, with the difference averaging $321,334. The proposed operating expense levy of $250,000, if approved, would release some of the “net cross subsidy” funds back into the general operating funds for use in improving other areas of the district’s curriculum.

Sellner commented: “In terms of special education, I feel we offer great programming for our special needs students. Both in our district and in our cooperative with MAWSECO, we have great programs and teachers. It is just too bad that the rising costs of those programs and [expenditures] to best meet the needs of special needs students, is not being helped by better funding from either the state or the federal government.”

The importance of a high S&P bond rating

In 2015, the district requested a Standard & Poor’s Financial Services (S&P) rating in relation to the issuance of bonds to build the middle school. S&P issued an A+ rating after examining the district’s financial management history.

Keeping an A+ rating going forward is important. According to Barbie Doyle, financial specialist with Ehlers, the district will have opportunities to refinance this bond at a better rate, provided that its S&P rating remains high. Refinancing the bond in the future to a better rate could be very favorable to taxpayers.

The previous A+ rating may be at risk due to the fact that over the last two years, the district’s fund balance has dipped below the recommended level of 8 percent of the total budget. This has been due primarily to the financial pressures outlined, and the board’s desire to keep class sizes as small as possible.

Budget cuts and some staff reductions have kept the overall budget in line, while existing class sizes have been, for the most part, maintained at desired levels.

According to Sellner, “We continue to be a district that has been able to keep good class sizes. Yes, some years there may be a section or two that is a little higher in terms of class size, but overall, I would say our class size, compared to many other districts, is excellent. In order to keep it that way, we need some additional funding.”

Budget approved for 2019- 2020 school year

The board approved a balanced budget, which includes an estimate that the district’s fund balance will remain at a little over 6 percent of the total budget by the year end.

What’s ahead

The board will follow election protocol for levy referendums. Information will be prepared for distribution to HLWW district residents, and Sellner and the board members will work to provide residents with the information they need to make an informed decision before voting.

The election will take place Tuesday, Nov. 5. There is no general election this November, so regular polling places will not be open, and voting will take place at, Howard Lake City Hall.

If approved, the levy will increase each year at the rate of inflation.

Next meeting dates

Monday, July 8, 6 p. m. - regular board meeting, HLWW High School media center.

Monday, Aug. 12, 6 p.m. – regular board meeting, HLWW high school media center.

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