About the Technology Referendum, Part 1: Looking at District Finances

On November 8, voters in the Eastern Carver County School District will be heading to the polls to vote on the Technology Bond Referendum.  The referendum would raise taxes on the median house in the District ($240,000) by $84 per year.

Any time a tax increase is on the docket, an examination of the District’s finances are in order.  So let’s have a look at what’s been going on in the District over recent years.

School Finance Basics

There are two primary sources of revenue for a school district — state funding and locally approved property tax referendums.  State funding consists of a basic per-pupil formula and several categories of specialized funding which the a particular district may or may not be eligible for.  For instance, rural districts that are large geographically but sparsely populated get additional funding to assist with the logistical problems inherent with such a scenario.

State funding for a particular year is actually broken out over two years.  Most of the payment is made at the beginning of the state’s fiscal year (July 1) based on projected enrollment.  The rest of the payment is made the following year, with a true-up to reflect the actual enrollment for the previous year.  In each of the last two budgeting cycles, the state legislature has made changes in this formula (more on this later).

Locally approved property tax referendums fall into two categories — operating funds (also called “excess” or “levy”) and bond referendums (for capital technology investment or land/buildings).

Revenue raised from bond referendums cannot be used to pay for ongoing operations of a district.  For instance, voters approved a $92 million referendum to construct Chanhassen High School.  Per state law, the District could not have taken all or part of that revenue and applied it to ongoing operations after it became apparent that the recession was going to have a significant impact on growth projections.

Funding Changes

The main issue the District has had to deal with over the last few years has been the changes in the split of state funding from year to year.  Prior to the 2009-10 school year, 90% of the school payment was made in year 1, and 10% in year 2.  This was changed for 2009-10, with the ratio being changed from 90% to 70%.  This change took a net $7 million out of the District’s accounts (there were some other finance changes as well).  In the last state budget cycle, the ratio was changed again, from 70% to 60%.  Over the next two school years, this change (combined with other changes also passed by the Legislature) will result in an additional $3.6 million being taken out of the District’s finances.

The operational referendums for the District remain in place as approved by voters.  The District currently has no Technology Bond in place.

Teacher Pay

Salaries for teachers are determined by two main concepts — “steps” and “lanes”.  “Steps” represent pay levels determined by seniority.  “Lanes” represent pay levels determined by education.  A combination of steps and lanes, then, determine a teacher’s salary.  For instance, a teacher with five years of seniority and a masters degree would earn more than a teacher with five years of seniority and a bachelors degree.

The steps and lanes chart for the current most recent ratified contact can be found here.  As you may recall, the most recent agreement was a difficult negotiation.  In fact, the District and the teachers union failed to reach an agreement by the January 15, 2010 deadline, costing the District $220,000 in fines.  The final agreement included a one-year freeze on “step” increases, which limited the average increase to about 1.5% per year.

Budget Cuts

In response to these challenges, the District has made substantial budgets cuts in recent years.  In 2009, the District cut $1.7 million from the budget, followed by another $1 million in cuts in 2010, and another $2.4 million in  cuts approved this year.

These cuts have had real world impacts on students in the District — larger class sizes, sharply increased fees for extracurricular activities among them.  Teachers and administration have seen their positions eliminated.

It’s been a challenging environment, to be sure.  The cuts have also impacted the District’s ability to invest in other things — including technology.

In Part 2, we’ll look at the current state of technology in the District as well as how the District plans on using the money that would be raised if the referendum were passed.  And, I’ll let you know how I intend to vote.

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