The Carlton School Board voted unanimously to accept its fiscal year 2021 district audit at the Nov. 15 school board meeting at Carlton High School.

While the report showed a clean financial audit opinion, technically referred to as unmodified opinion, the financial complications from a growing number of resident students leaving the district was reflected in the loss of state revenue during the 2020-2021 school year.

The audit conducted by BerganKDV, a professional financial services firm based out of Minneapolis, showed a decrease in both resident students served and non-resident students coming into the district on the adjusted pupil units table for average daily membership.

Adjusted pupil units is the weighted system in which student enrollment totals are calculated. Pre-kindergarten through sixth grade students are counted as 1 pupil unit, while those in grades 7-12 are weighted heavier and counted as 1.2 pupil units.

Average daily membership calculates the average number of students enrolled in a school district over the course of the school year with one school day being the equivalent of 1 ADM.

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The Carlton School District saw a significant decrease in non-resident adjusted pupil units served at 154.62 for 2021, which marks a five-year low dating back to 2017.

The number of resident pupils going elsewhere increased to 411.78 in 2021 from 407.49 in 2020. The district had its lowest number of resident students going elsewhere in 2017 with 366.66. Resident pupil units served also dipped to 683.26, after peaking in 2018 with 710.40.

Overall, the Carlton School District had its lowest five-year total of adjusted pupil units in 2021 with 426.10, down from 461.09 in 2020. The district had its highest total over the five-year period in 2017 with 510.20 adjusted pupil units. The total has seen a steady decrease in each year since that mark.

As a byproduct of these declining numbers, state revenue for the district decreased by over $156,000 in 2021.

Carlton Superintendent John Engstrom alluded to these trends during the Nov. 15 board meeting when he discussed the reasons district leaders are exploring a tuition agreement with Cloquet.

“Last year, there were more Carlton High School students at Cloquet High School than there were Carlton resident students at Carlton High School,” Engstrom said. “I wish that weren’t true, but it is true. And that again is a pretty key data point, in my opinion.”

While the issue has come to a head this year, it’s been an ongoing issue for the district, according to Engstrom.

“We’re down 58 kids since 2013 who started with us and then left. If you look at that just purely financially, that’s somewhere between $500,000 to $600,000 a year,” Engstrom said. “If we would have been able to retain all or most of those kids, we wouldn’t be in the situation we’re in right now.”

The Carlton School District failed to meet its unrestricted fund balance policy of 16-25% of general expenditures. District expenditures for 2021 were $5,571,193, and the unrestricted fund balance was $710,713, which falls short of the 12.75% target.

In an email to the Pine Journal, Engstrom explained that the policy is meant as a precautionary tool as the district strives to meet the 16-25% mark.

“This policy is meant to help set a tripwire of sorts so that corrective actions are taken if/when the percentage falls below the threshold,” Engstrom explained.