The school board continues to deny it's roles in creating the current budget mess, yet they continue to advocate for an automatic renewal to the levy/referendum. They refuse to hold themselves accountable for the mess they have made. Worse, they want to deny you the opportunity to hold them accountable by removing your right to vote on a referendum.
Total long-term debt stands at about $200,000,000 (that is tw0-hundred million dollars) as noted in district financial reports. Taxpayers from the state of Minnesota are on the hook for this irresponsible borrowing. Time for a change. Vote for Bowman, Holmes and White for the Robbinsdale School Board.
Two Tales of a District: What’s the Truth for Robbinsdale ISD 281?
Topic: Statutory Operating Debt (SOD) and financial health of the District
BACKGROUND: October 20, 2020, two weeks prior to the school board election, the School Board and Administration issued an email to their entire Robbinsdale Area Schools community database, covering a number of financial topics the Board claimed to have been questioned about at the October 19, 2020 School Board meeting.
In response, a research series covering these topics is intended to ensure the community has a clear understanding on the substantial differences between the information the Board and Administration presented the community and the factual state of financial affairs in District 281.
SCHOOL BOARD/ADMINISTRATION: “The finance department is currently working with an external firm, MMKR, to conduct the District’s annual audit, which is currently in process, for Fiscal Year 2020. The audit is expected to meet or exceed the District’s budgeted $1.1 million surplus in General Fund Unassigned funds for the fiscal year.
This means the District is not in Statutory Operating Debt (SOD), which is defined as “ a fund balance that is negative 2.5 percent or greater unreserved general fund balance calculated as of June 30 of each year in accordance with the uniform financial accounting and reporting standards for Minnesota school districts.”
Audited data for Fiscal Year 2019 shows the District at positive 1.11 percent fund balance (or $1,474,965) versus a Statutory Operating Debt threshold of negative $3,333,682. This shows the District is more than $4.8 million higher than the SOD threshold at the end of Fiscal Year 2019. The District’s Fiscal Year 2019 Uniform Financial Accounting and Reporting Standards (UFARS) compliance report, which is submitted to the Minnesota Department of Education, can be reviewed here.
Additionally, the state does not ‘take over’ school districts or charter schools in SOD. Districts and charter schools are required to file a special operating plan to eliminate the deficit, in accordance with MN Statute 123B.83. subdivision 4.”
THE RESEARCH: While the Board and Administration’s statements above are technically accurate, they are also misleading, as they only tell 1/2 of the story. How the board avoided Statutory Operating Debt last year is the other half of the story.
From the State audit conducted over the spring and dated June 15, 2020, by Auditor Julie Blaha: "We recommend the District balance the District budgets and increase fund balance in the General Fund to avoid possible statutory operating debt."
From the S&P Report, page 4:
"We understand past deficits were due primarily to declining enrollment and lower-than-anticipated special education funding, coupled with some cost pressures stemming from contract negotiations. For fiscal 2019, the district faced a budget gap of $10 million and made cuts to curriculum, technology, classroom support staff, and supplies, all of which contributed to an adopted balanced budget.
However, negative variances persisted and expenditures exceeded revenues before transfers. The district made a one-time transfer of $4.75 million from its other postemployment benefit (OPEB) trust for catch-up expenditures over the past decade. After the transfer, the fiscal 2019 audit included a $1.075 million addition to reserves--its first in four years." (emphasis added)
This transfer was omitted from the Board and Administration’s important update to the community.
Using the numbers the Board and Administration provided above, and including the one-time transfer from the OPEB Trust fund: $1.475 - $4.75 = ($3.275) vs. the ($3,334) – the district was a mere $59,000 from Statutory Operating Debt.
Also from the Auditor Blaha's summary:
Request: Provide information about the accounting for the District’s OPEB costs and transfers from the OPEB trust to other funds of the District.
Recommendation: We recommend the District develop a plan that requires a determination of amounts and when they are to be transferred prior to the release of the financial statements so they properly disclose the amount in the Trust.
“Subd. 4.Special operating plan.
(a) If the net negative unreserved general fund balance, calculated in accordance with the uniform financial accounting and reporting standards for Minnesota school districts, as of June 30 each year, is more than 2-1/2 percent of the year's expenditure amount, the district must, prior to January 31 of the next fiscal year, submit a special operating plan to reduce the district's deficit expenditures to the commissioner for approval.
The commissioner may also require the district to provide evidence that the district meets and will continue to meet all high school graduation requirements.
Notwithstanding any other law to the contrary, a district submitting a special operating plan to the commissioner under this clause which is disapproved by the commissioner must not receive any aid pursuant to chapters 120B, 122A, 123A, 123B, 124D, 125A, 126C, and 127A until a special operating plan of the district is so approved.” (emphasis added)
When "districts and charter schools are required to file a ‘special operating plan’ to eliminate the deficit", which must be approved by the state Commissioner, the Board and Administration have no justification to address themselves as "good stewards of your tax dollars" as they have in several recent communications, including the October 20, 2020 financial update.
Embedded Links:
The District’s Fiscal Year 2019 Uniform Financial Accounting and Reporting Standards (UFARS):
Robbinsdale District 281 Petition Audit Summary, June 2020: https://www.auditor.state.mn.us/.../isd281...
S&P Global Ratings Direct Ratings Report, October 2020: https://resources.finalsite.net/.../RatingsDirect...
MN Statute 123B.83. Subdivision 4. Statutory Operating Debt: