Fiscal Year 2025 Budget Planning

In the 2024-2025 fiscal year, $3,620,000 would represent 2.25% of the budget.

Unless a dramatic shift occurs to the way public school districts are funded in Minnesota, expenditures will likely always increase at a rate greater than revenues. This means that each year, unless program efficiencies or cost reductions occur, there will be some budget gap. The degree of the shortfall can vary due to a myriad of factors. 

Despite the historic funding increase specified in the state’s 2023 education bill, increased expenses stemming from high inflation and rising labor costs are still surpassing the annual funding increments provided by the state resulting in a widening—rather than narrowing—gap in funding, as illustrated in the "General Education Formula Allowance" chart below.

The chart from the Association of Metropolitan School Districts (AMSD) demonstrates that had the allowance increased by the rate of inflation each year since 2003, the 2025 allowance per pupil would be $8,637. The difference between the FY25 formula allowance per pupil and the inflation adjusted formula allowance is $1,356 or 18.6%. 

This funding gap is true for districts across the state. What this means for funding here in Edina Public Schools, is had the allowance increased by the rate of inflation each year since 2003, the 2025 allowance per pupil would be $1,356 more per pupil, or $12.8 million more funding for Edina Public Schools. ($1,356 state funding gap x Edina Public School's per pupil count = $12.8 million gap in state funding)

In addition, total compensation for all staff in the district is also expected to exceed original estimates by about $4.5M to $5M. This increase will only compound in future years, which means the district will need to immediately take measures to contain its budget and ensure long-term sustainability.

The fund balance is the residual value of the district’s revenue less expenditures over time. As of June 30, 2023, the district’s unassigned fund balance was $8 million, which equals 6.9% of the subsequent years' unassigned general fund expenditures. Increased expenses stemming from high inflation and rising labor costs are expected to drop our fund balance to 5.6% at the end of FY24. Our school board’s policy is to maintain the fund balance at a minimum of 6.0% of expenditures. Using fund balance to compensate for the projected shortfall would bring our balance significantly out of line with board policy and deplete our fund balance to a dangerous level, jeopardizing our ability to make payroll, perform essential district functions, and plan for unexpected emergencies. Using the prior example, it would be similar to using funds an individual has set aside for retirement to pay for current, ongoing expenditures.

Edina is one of only three school districts in Minnesota, and 93 out of about 16,000 school districts in the country, that have an Aaa credit rating from Moody’s Investor Services. As with personal credit, our credit rating determines the interest we are charged for debt - the stronger the credit rating, the lower the cost to borrow. We consider maintaining an Aaa credit rating to be one of our primary ways we define excellence in financial stewardship of district resources. A contributor to our premium credit rating is the strength of our general fund balance.

A priority through the BRRRG process has been to maintain existing class sizes. We have, and always will, prioritize providing an excellent education to all of our learners. Doing so requires us to prioritize retaining and attracting highly qualified teachers and staff.

As we work to balance our budget, teacher retention and recruitment is a top priority. The proposed budget anticipates a significant budget increase for salaries and benefits next year.  

Effective retention and recruitment strategies, however, are not limited to compensation alone. The district is actively working to promote staff wellness. The district has established a wellness committee devoted to enhancing the well-being of our staff through special events and support. It is implementing creative and supportive ways to elevate staff morale and health.

Students are admitted to a district through Open Enrollment when the district has extra capacity above and beyond its ability to serve resident students. Open enrollment allows the district to efficiently use the educational space within our system, creating the financial sustainability that allows us to maintain all of our schools and programs.

In the winter of 2023, the District went through cost containment measures in the amount of ~$4 million. The District assumed a 2.0% increase on the basic formula and no other increases. Edina Public Schools moved forward with community input through the BRRRG (budget reduction, reallocation, and revenue generation) process. The school board-approved reductions included: middle school licensed staff “right-sizing,” school site operating capital freeze, administrative staffing reductions, chargebacks to the special revenue funds, use of the tech levy for eligible expenditures, a return to pre-pandemic paraprofessional staffing, etc. During the 2023 legislative session (and after cost containment measures were done), the state came through with additional funding and provided an additional 2% which amounts to $1.3 million. 

The district has been through a BRRRG process almost every year since 2006. Unless a dramatic shift occurs to the way public school districts are funded in Minnesota, expenditures will likely always increase at a rate greater than revenues. This means that each year, unless program efficiencies or cost reductions occur, there will be some budget gap. (See the FAQ, "Should we expect a shortfall every year moving forward?")