When Minnesota's two-year spending plan was signed into law recently, it included a 2 percent increase in education funding each of the next two years.

For the Alexandria district, that meant an extra $2.28 million over the two years compared with current funding levels, with $410,886 of it in special education funding.

Trevor Peterson, director of business services for the district, had already budgeted for a 1 percent increase, plus accounting for enrollment projections. So the 2 percent hike amounted to less than $500,000 that had not been expected.

That money came in handy as the district attempted to balance its budget for the coming school year, and combined with more than $500,000 in spending cuts, it mostly plugged the $1.1 million shortfall projected for the 2019-20 school year.

At its monthly meeting Monday night, the Alexandria School Board approved the preliminary budget, and learned from Peterson and Superintendent Julie Critz that more financial challenges await.

They hardly come as a surprise. The Echo Press reported on them last month, and Critz has already held a few dozen small-group discussions with various groups on that very topic.

The district projects an increasing disparity each year between revenues and expenditures. Funding from the state, which is the largest source of revenue, may have been increased 2 percent. However, Peterson told the board that other aids go into a school budget, and those aren't increasing at all or at a minimal rate.

"That 2 percent becomes 1.4 pretty quickly," he said of total revenue. Expenditures are higher than that, and he said the imbalance is growing by between $500,000 to $650,000 per year.

"That's a big nut to crack going forward," board President Dean Anderson said.

The deficit is expected to grow to $2 million in 2020-2021, and about $2.5 million the following year, Peterson said.

Surveys and studies

At the conclusion of the school board meeting, Critz used a PowerPoint to bring the board up to date on results from community surveys and from studies.

A community survey last fall found strongest support for three areas: mental/emotional health, real world work programs, and class sizes. That was reinforced in conversations this year with what was termed "stakeholders" - people who are connected to the school in some fashion.

A demographic study shows enrollment increasing from 12-14 percent over the next 10 years. Critz pointed out that is nearly double the 7 percent rate it increased over the previous decade.

A facilities study determined the need for additional space for small engine, robotics and woodworking classes. Critz was pleased to see interest growing again in career technical education programs, and said they are looking at turning the maintenance shed in the back of the school into a spot for industrial tech classes.

"Elementary class sizes are higher than we want them to be, but classrooms are at a premium," she said, noting that they are also looking at finding room to keep more special education students in the district. Early childhood programs have been full.

"At this point we are maximizing the spaces we have," Critz said.

Less revenue

In the face-to-face conversations with stakeholders, she said many were surprised to learn the school district was in the bottom 10 percent of schools in the state in terms of funding, and also ranked low as far as local revenue.

A postcard mailed to district residents last week under the heading, "Doing more with less," stated Alexandria was one of the only districts in the area that has no voter-approved operating levy - its last one expired in 2014. Critz said they ranked 13th out of the 14 districts it often uses to compare with for many purposes.

"Only one district (from that group) gets less," she said. "We are working with less revenue per pupil than most districts in the state."

Critz said there was strong support among those stakeholders for an operating levy.

"We also know there are certainly positive impacts to having a strong school system," she said. She heard stories of how a strong school has a significant impact on the area's economy and workforce, and is a pull in attracting workers to area businesses.

"One of the realtors said property values have never benefited like they have since the new high school," Critz said.

Cutting staff and programs due to lack of funding has lasting effects, she told the board, saying that what is reduced in one year does not necessarily rebuild itself, and programs are affected long-term.

"To be fiscally prudent, we can't wait. We're getting to that point where we need to make some decisions."

If some class sizes were reduced by adding additional classes, that presents other difficulties, such as where to put extra classrooms.

"We'll need to be looking at both issues," Critz said.