MI: Ledger error worsens district's money woes

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Ledger error worsens district's money woes

BY JOHN WELSH Pioneer Press

New bad news regarding Forest Lake School District's financial health has raised the stakes for the Nov. 6 levy referendum before voters, district officials said.

An accounting error has turned a relatively small budget deficit into a much larger one that will likely land the district on a state list of financially troubled school districts next year.

The error -- a "double posting" of a credit on Forest Lake's financial ledger -- was discovered last week. The school board was told of the error this week.

Voters deciding on the district's $5.8 million levy referendum already faced a scenario of harsh cutbacks if it was defeated, including the closing of an elementary school, layoffs of about 7 percent of the district's classroom teachers, elimination of all junior high after-school activities and a big cut in the number of students served by the district busing program.

Now, given the updated finances for the district, school officials say the need for the levy has only increased.

"We are at a crossroads. Our plan if the levy fails is clear and we don't think it's good for kids," said Larry Martini, director of business affairs for Forest Lake. "But either way we will bring the district out of a deficit position."

The district last year had a general budget of $52 million. Officials knew they were going to end the 2001 fiscal year with a deficit. But the combination of the accounting error, higher-than-expected energy costs and other factors turned the anticipated deficit of $300,000 into one of $2.3 million. A final audit report is expected next month.

Because the deficit is more than 2.5 percent of the operating budget, the district is expected to join the state's list of districts considered to be in "statutory operating debt," a designation that calls for more stringent financial oversight by the state education department. Last year 24 districts across the state were on the watch list, including Columbia Heights and Roseville. In recent years other metro districts, including White Bear Lake and West St. Paul-Mendota Heights-Eagan, landed on the list before an improved financial picture allowed them to get off.

School board candidate Dick Tschida, an opponent of the levy referendum, said the district's financial woes predate the accounting error and last year's harsh winter. He said the district should have been better prepared.

"The reason I'm against the levy is because the district knew at the beginning of the year it had to tighten its belt," Tschida said. "I don't want another year out of control."

But board President Bill Bresin said such criticism is unfair. He said the school board made more than $3 million in program cuts -- including the layoff of 40 teachers -- earlier this year in order to balance the books.

"We would have made more cuts at the time if we had known" of the worsening budget situation, Bresin said. "This shows that more than ever, we need the referendum."

If passed, the levy would add $321 to the school portion of the property tax bill for the owner of a $150,000 home. But even with that increase, that same owner's bill would be one-fourth lower than this year's because of the changes enacted in the state property tax system by Gov. Jesse Ventura and the Legislature. Forest Lake's local chamber of commerce endorsed the community's levy proposal this week.

Pioneer Planet

-- Anonymous, October 20, 2001


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