Looming deficits could lead to budget cuts in Willmar schools next year

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Jun. 14—WILLMAR — The loss of students, inflation and the end of federal pandemic aid could lead to 2023 budget cuts for Willmar Public Schools.

The Willmar School Board approved the 2022-23 budget for the school district Monday.

The budget projects revenue of $62.5 million in the general fund, an increase of $1 million or 1.6%. The general fund pays most operating expenses of the district.

Projected expenditures are $67.6 million, an increase of $4.2 million or 6.6%.

Director of Business and Finance Kathryn Haase said the difference between income and spending reflects increases in wages, benefits and transportation costs.

The district's general fund balance is expected to shrink from 21% of annual expenditures to 12.3%, about $8.3 million, over the next year, she said. The board has a goal of at least 6% of expenditures in the fund balance.

The proposed budget has many unknowns, like the impact of inflation, Haase said.

The budget contains funding for a full staff, but "that may or may not happen," Haase said. The district had a number of open positions in the past year. If that happens again, some of the staffing money may not be spent.

State aid is tied to pupil numbers, and the district has more than 150 fewer students than two years ago. It's seen a drop from 4,261 in 2019-20 to a projected 4,105 in 2022-23.

Haase said the decline is a combination of factors, and it's not clear whether some of the students will come back. Some families chose homeschooling when schools closed in March 2020. Other students now attend private, online or other public schools.

The food service budget, separate from the general fund, has been hard to estimate, too, she said. The federal government has provided free meals for all students since March 2020, but that has ended.

It's not clear how many students will eat school lunch when there's a charge for it again, she said. The district provides breakfast free for all students and encourages all families to fill out applications for free and reduced-price meals.

The COVID-19 pandemic caused many disruptions and additional expenses over the past two years, and federal aid had helped school districts maintain their operations through the pandemic.

However, some of the federal relief funding has already ended, and the rest will end over the next two years.

Willmar used the millions it has received to buy electronic devices and other equipment for distance learning and to hire additional school social workers in temporary positions. Federal funding provided safety equipment for staff and students. Improved air filtration has been installed in buildings.

Relief funding will pay for staff training time to implement a new method of teaching and evaluating students called standards-based learning. Some of the work has started and will continue over several years.

Because salaries and benefits make up about three-quarters of the budget, it will be difficult to find ways to reduce future budgets without cutting staff, Haase said.

"With the numbers we're looking at now, we're going to have to adjust our staffing patterns to match our enrollment," said Superintendent Jeff Holm. "I anticipate there will be some pain in that."

The district has had a strong fund balance, he said, and people have asked if it was needed.

"It's a good thing we have it right now, but we can't continue to live on it," he said.

Board member Scott Thaden asked what other districts are doing with their budgets.

Some districts started making cuts already, Haase said — "It's hitting us on a lag compared to a lot of others."

Board Chairman Justin Bos said, "The fund balance probably bought us a few years other districts didn't have."

The board also approved contracts with the Palmer Bus and Willmar Bus companies, which provide bus transportation for the district. The companies will receive a 6% increase in the coming year, and 3% increases in the second and third years of the contract.

The district also pays fuel costs if prices rise above $2.80 per gallon.