Minnesota's deficit is forcing school cuts

East metro school districts from the Mississippi to the St. Croix are scrambling to plug holes in their budgets that many fear could be drained next year.

Already school districts in Forest Lake, North St. Paul and South St. Paul are considering layoffs and program cancellations. In addition to staffing changes, the proposed solutions include tapping into the reserve funds they've stored up over the years, called fund balances.

The St. Paul Public Schools have been working on ways to bridge a $28 million deficit for months. A similar gap last year led to layoffs of more than 200 people in the state's second-largest school district.

Ultimately, the budget shortfalls result from the state's $1.2 billion budget deficit and, in some cases, declining enrollment. Most schools are assuming they will not get a funding increase from the state -- their major funding source -- while their costs will increase largely because of inflation and modest teacher salary increases.

Worse, they fear what will happen a year from now, when the state's deficit is expected to top $5 billion. "We're trying to come up with the right mix of budget cuts and fund balance usage," said Nancy Livingston, chair of the North St. Paul-Maplewood-Oakdale school district, which faces a $7.8 million deficit next year. "We're still kind of wrestling with that."

The district's board rejected an earlier proposal by school administrators that would have kept teacher and program cuts to about $1 million. Now it appears the district will cut about $2 million on salaries and programs to bridge the gap, Livingston said.

Regardless how tight the budget is, the district is holding to its all-day, everyday free kindergarten. It costs about $1 million per year, but is a key part of the district's effort to attract and keep new students, Livingston says. "Dropping it is at the very end of our list."

Superintendent Linda Madsen says the district has cut many other non-personnel items in recent years. At this point, "It's almost impossible to avoid personnel cuts," she said.

Already the South St. Paul district is laying plans to cut its budget by $600,000, much of it through layoffs of five teachers. The Mahtomedi schools have a $1 million hole to fill but officials haven't said how they intend to do it.

Even relatively healthy districts are worried. South Washington County Schools, for example, has a $22.3 million fund balance and will spend $6.2 million next year, plugging the hole in its $150 million annual budget. Similarly, the Stillwater and White Bear Lake schools expect to make up deficits with money from their excess fund balances.