The Mount Vernon School board also heard from Larry Sigel with Iowa School Finance Information Services to walk through some of the intricacies of school finance.
Sigel reiterated when it comes to school finance, that there is limited crossover between funds.
The majority of school funding comes from the State of Iowa, not local property taxes.
“That’s why state aid is so important,” Sigel said. “Roughly 2/3 of every dollar schools receive comes from state aid.”
State supplemental aid was set at 2.5 percent, which Sigel and superintendent Greg Batenhorst note does not meet with the inflation of costs the district is facing.
One of Mount Vernon’s issues is that the district has lower property valuation compared to other districts, ranking 283 out of 325 districts in Iowa, or the bottom 20 percent.
“Because you have a lower property valuation, that has a higher impact on property taxes in the district,” Sigel said.
Sigel said the district has a large population of students, reflected in the open enrollment numbers, but the district has seen flat resident enrollment over the past several years which have led to the situation’s impacting the district’s solvency ratio and unspent balances.
“The issue was that the district was planning to see enrollment trends that increased in a positive direction that just didn’t materialize,” Sigel said.
Sigel said the district’s unspent balance has been shrinking between $600,000 to $700,000 annually over the past three years, meaning there will need to be cuts made that approximate that much spending over the next few years to course correct.
“That is the issue, if the unspent balance is not corrected before it goes negative, then that’s when the state has to start intervening,” Sigel said.
Sigel said the unspent authority can’t be increased via levy rates, it will have to be made by correcting spending imbalances of the district.
Marshal, Sigel and Batenhorst said the projections they have been using have already factored in increasing costs for staff and insurance moving forward.
Board member Suzette Kragenbrink said the last time the district looked at cuts this large was around 2010, when a number of positions, including associated coaches and librarians in the district were reduced.
“We understand that cuts have consequences, and they’re not enjoyable for anyone,” Kragenbrink said. “The district has been in this situation before.”
Batenhorst said in 2014 is when the district started seeing the stagnant growth in state supplemental aid in education expenditures, which has impacted the district this past decade.
During his report, Batenhorst said he was sorry that the district was at this point.
His memo to board members and the community in March indicated several factors that have contributed to the issue, but the flawed assumptions for enrollment growth that didn’t materialize over the past five years without adjusting the district’s expenditures are what led to this point.
“We should have reacted quicker to this dip in enrollment, and that is on me as a leader,” Batenhorst said.
Over the past year, Batenhorst said the district has been hyperfocused on the insurance issue discussed later at the meeting, and not on the larger picture of the solvency ratio the way they should have.
The school board election and new superintendent hiring delayed some of the focus on the issue as well.
Batenhorst said he and the school board will do everything they can to protect programming that people expect in the district, but decisions are going to have to be made on cost saving initiatives to save the district money to get the unspent balance back under control.