The Carlton School Board approved its preliminary budget for the 2021-2022 school year that contained a massive $930,000 projected deficit during its meeting Monday, June 21.
The budget presented by district business manager Norman Nelis included conservative projections for revenue and student enrollment for next year.
“What we have traditionally asked Norman to do is try to give us — not an absolute worst case scenario — but a very conservative kind of estimate,” Superintendent John Engstrom said. “You have projections that tend to run a little high and then we’ve been able to make some changes and modifications throughout the year, things broke our way a little bit and we were able to come in underneath that projection.”
The budget made several assumptions in the budget that shows approximately $7.5 million in expenses and less than $6.6 million in revenue, according to Nelis. Those assumptions include a 1% pay increase across the district, which represents $350,000 of the deficit, Nelis said.
Another assumption Nelis made was a projected decline in enrollment to 385 students and a shift to students at the elementary level.
“Recently, we have graduated a couple of larger classes,” Nelis said. “Graduating seniors and high schoolers are worth more in state funding than elementary students. We’re starting to see a shift where the bulk of our students are at the elementary level.”
Carlton officials have made some reductions over the past few years, but with salary increases and other expenses, the district’s spending is nearly at its level from two years ago, Nelis said. Revenue, however, has dropped by about $450,000.
Another issue affecting the district’s revenue is applications for free- and reduced-price meals are “down significantly” this year, Nelis said. The decline resulted in a $70,000 loss in compensatory education revenue, but there are many other revenue streams, including Title I funding, that are affected by free- and reduced-price meal numbers.
Board member Tim Hagenah, who has been a board member for more than 20 years, cautioned the board against overreacting to the projected numbers. Hagenah agreed with board member Ann Gustafson that a $930,000 deficit isn’t sustainable, but pointed to the 2020 budget that projected a deficit of more than $363,000. The audit presented in December 2020 showed an actual loss of less than $150,000.
“Just because a number looks fairly big, I don’t push the panic button until we get to the audit,” Hagenah said. “The audit really explains where the district is standing ... Everybody take a deep breath. I know a while back we were projecting something big, and we came in quite a bit under what we were projecting.”