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Dist. 88 levy increases; ’12 audit positive

Theater group addresses board on potential middle school sale

December 7, 2012
By Kremena Spengler - Staff Writer , The Journal

NEW ULM - The proposed local school tax levy payable in 2013 would increase approximately 23.51 percent, or $1,171,256, compared to the actual 2012 levy, District 88 Business Manager Myrna Meunier told a truth in taxation hearing, at the start of a regular school board meeting Thursday night.

The majority of the increase, $1,314,141, is attributable to a new levy approved by voters Nov. 6, Meunier explained. This levy will provide $575 per pupil per year, adjusted for inflation, to fund daily operations.

Most changes in the local levy are governed by state formulas and regulations, and many are revenue-neutral, noted Meunier.

In more specifics, a category called "equity levy" would decrease by $64,800 because of the passage of the new voter-approved levy.

In another example, the operating-capital levy will increase by $55,016. Funding for this program is provided through a combination of state aid and local taxes. Because the district's total property value increased, the share of funding provided through local taxes is increasing, said Meunier. State aid will decrease by a similar amount. Due to declining enrollment, operating capital is decreasing as a whole, said Meunier.

In other highlights, the health and safety levy will decrease $90,610 because of fewer state approved health and safety projects being done by the district.

The building lease levy will decrease $14,989 because of the decrease in the lease of modular classrooms.

The levy for early childhood and family education will increase $11,626 because of the increase in property value. But because the allocation for this category is capped at $120 per estimated population under age five, state aid will decrease by a similar amount, and the net effect on funding is zero, said Meunier.

No questions were asked at the tax hearing.


After the hearing, the Board of Education heard a report on the 2012 financial audit conducted by CliftonLarsonAllen, LLP.

The auditors gave the district high marks for its record keeping and compliance with federal and state reporting standards.

The auditors noted that the district resorted to deficit spending to help fund daily operations in fiscal 2012. The operating deficit was about $300,000.

Auditors recommend a general (operating) fund-to-unassigned fund balance ratio in the range of 8 to 16 percent. Despite decreasing, the local ratio is close to this target, at 7.8 percent, the auditors said.

The general fund cash balance, net of short-term debt, moved into negative territory by approximately $1.7 million in 2012, the auditors said. This development reflects the increasing amount of a state-aid hold-back. In 2012, the state paid only 60 percent of what it owes schools during the current year, holding back 40 percent. In contract, this split was 70/30 percent in 2011, 80/20 percent in 2009 and 90/10 percent in years before that. While easing state budget burdens, this approach forced school districts, including New Ulm, to resort to short-term borrowing to pay the monthly bills.

The auditors praised "healthy" local balances in specific areas, such as food service, community service, deferred maintenance, etc. They also commended the district for its low debt burden.

Agreement with principals

District 88 negotiator Susan Nierengarten reported that the district has reached an agreement with principals, who have been working without a contract since 2009.

The agreement covers two three-year terms, 2009-2012 and 2012-2015.

The new contract provides no salary increases for the first two years of the period and a 1 percent salary increase for each of the remaining years, Nierengarten said. She said this provision was comparable to arrangements with other employee groups.

In addition, the sides agreed on sunsetting existing retirement health-insurance and severance provisions. These provisions will apply only to present principals and not to future hires. The result is that the district will be able to levy to meet these obligations, rather than using normal operating money, and save money in the future, Nierengarten said.

Adjustments were made to deferred compensation after July 1, 2012, Nierengarten said.

NUACT appeal

Paul Warshauer, executive director of local theater group NUACT, addressed the board as it prepared to hold a closed session after the meeting, to discuss the potential sale of the former middle school.

The board is considering selling the property to Eagle Development, LLC, not NUACT.

Warshauer restated that NUACT was involved in two of the three "serious" bids to buy the building.

He expressed his group's concern about the preservation of the school auditorium under potential new ownership - questioning whether renovation and restoration (new curtains, new seats) would occur, and historic murals preserved.

Warshauer also restated his group's intention to turn the building into market-rate apartments, rather than senior housing, as proposed by Eagle Development. A city study indicates senior housing needs have been met, Warshauer said.

Warshauer acknowledged his appeal may be NUACT's last chance to address the board.

NUACT may need to look for alternative space if the auditorium is no longer available to it, he also said.

Warshauer did not specifically ask for, or receive, an immediate response from the board.

The property was put up for sale last spring, citing high maintenance and potential renovation costs, and because student numbers no longer support its use as a school. Only 20 percent of the building is in use, the district says.

The auditorium and related spaces remain in strong demand, by both school and community groups.

Eagle Development bid $100,000 for the building, while NUACT was involved in two bids, respectively $50,000 and $25,000 each, depending on different conditions and specifics.

The district chose to not immediately accept a bid, but to continue to negotiate with the highest bidder.

The district is close to an agreement with Eagle Development, and a sale could happen as early as the next board meeting Dec. 20, officials said.



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