Comp ed changes grow Duluth schools deficit to more than $6 million

By Adelle Whitefoot

After the Duluth School Board passed a resolution on compensatory education in late January, the preliminary deficit grew by more than $2 million for the 2018-2019 school year.

The board was presented with updated preliminary unrestricted general fund budget changes on Tuesday during a committee of the whole meeting, showing a deficit of more than $6 million. In early January, the board was presented with preliminary numbers of a nearly $4 million deficit. The difference, according to district’s director of business services and CFO Doug Hasler, is due to the changes in how compensatory education funds will be distributed.

“The early version of (the preliminary budget changes) that was prepared back in January prior to the board ultimately passing a resolution which gave direction to the administration as to how compensatory education revenues were to be distributed going forward,” Hasler said. “So the most recent (numbers) reflect what we believe to be the intent of the board in the resolution that they ultimately approved.”

The School Board passed a resolution in January stating in the 2018-2019 school year schools would keep a minimum of 80 percent of the compensatory education funds they generate, and that the minimum percentage allocated will increase by 5 percent in each of the subsequent two years. The remaining 20 percent would be used district-wide to reduce classroom ratios.

Each school generates a certain amount of compensatory education funds based on its population of students taking part in the federal free and reduced-price lunch program.

Superintendent Bill Gronseth said that after the resolution was passed in January, the administration made the assumption that the 80 percent would be all discretionary funds to be used above and beyond classroom ratio support. Hasler said the district is currently using around $4 million of compensatory education funds to support classroom ratios, but the 20 percent allocated next year would only be just over $1 million to be used in such a way. So the difference of nearly $3 million would need to be filled in by the general fund or the district would have to raise its current classroom ratios to make up the difference, Gronseth said.

“If we take all of the general fund dollars we have available to apply to the ratio, that gets us to a certain amount. We have used compensatory education funds in the past to bring that level up a little bit to lower that class size,” Gronseth said. “If we’re saying that we are going to use less compensatory education funds at a district-wide level, that bump that we have given to the ratio, we need to address that. We either need to make up that gap with general fund dollars that we are currently spending in other ways or we need to change our ratios.”

Current district class-size ratios are: 24.4 for kindergarten; 26.4 for first and second grades; 28.4 for third grade; 29.4 for fourth and fifth grades; 26.1 for sixth through eighth grades; and 27.8 for ninth through 12th grades.

Some of the board members took issue with the nearly $3 million being portrayed as a deficit.

“I believe this number is overinflated,” board member Alanna Oswald said. “Class-size ratios affect the schools equally and it completely undoes the equity-minded, hard decision we made for compensatory education. You can’t raise class sizes across the district and then ask schools to use their compensatory education funds to lower their class-size ratio because then we’d be stuck with what we have today.”

Board member Nora Sandstad, a strong supporter of compensatory education reform, agreed with Oswald about the number.

“I think that this number is artificial and it’s at least three times the number we were given in January,” Sandstad said. “It presumes that now going forward next year, none of (the discretionary) dollars will be used toward FTE in classrooms. As a big picture, putting this out as a nearly $3 million loss is illogical — it’s a nearly $3 million loss to our standard ratio funding not our general fund.”

Though the deficit increased more than $2 million since January, the budget committee has been workshopping the budget and believes it has found nearly $3.5 million in reductions, leaving the district with a $2.5 million deficit. What those reductions are is not currently available as some pertain to sensitive personnel changes, Gronseth said.

“We can get you a list of those reductions,” Gronseth told the board, “but some of them will be kept very vague as we don’t want people finding out about the future of their positions in a public meeting.”

The board is expected to receive a preliminary budget Monday during the business committee meeting with the $3.5 million in reductions.