The current EMID budget calls for EMID to end the FY2013 year with about $900,000 in reserves and $1,000,000 in its capitol fund. This is a dramatic reduction from the $5,000,000 EMID had available at the close of FY2008.
EMID’s fiscal year runs from July to June. That means that FY2013 runs from July 2012 to June 2013. Note that this is a slightly different calendar than the EMID school year, which runs from September to August. So school year 2011-2012 actually starts in FY2011 and is mostly in FY2012. As a practical matter, people usually reference the school year and fiscal year as synonymous, but it is good to remember that is not quite the case.
The EMID financial model can be divided into there general eras: the model prior to FY2009, the FY2009 model, and the FY2013 model. These are described below.
There are three major streams of funding that are sources of income to the EMID budget:
- Backpack money: the state provides each school district with a certain amount of money per child, a base level of funding. For our purposes we will also consider certain federal dollars for special education and the like to be in this backpack.
- Integration funding: when a district participates in an integration collaborative, the state also sends that district a certain amount of integration funding per child. Note that some of this integration funding is state aid, but another portion of it is generated through local levies within each district. Since all our districts take advantage of this extra levy authority, we make no distinction along those lines below. There are two flavors of this money from EMID’s perspective:
- Per-Pupil-Unit (PPU): every pupil in the member district generates integration funds. A certain portion of these funds are sent to EMID regardless of whether a particular student attends EMID schools. Note, the Saint Paul school district has always been exempt from sharing PPU integration funds with EMID. (The official term for this is “per resident AMCPU,” but that just sounds too mysterious and complicated, so we’ll stick with PPU.)
- Per-EMID-student (PES): if a student attends the EMID schools, then all of that students integration funds are sent to EMID. This is true of Saint Paul students as well.
- Levy funding: each member district has the authority to ask local voters to support additional tax levies for their schools. Those levies vary from district to district, but they are usually describe as a per-pupil amount of money.
There are two major expense centers in the EMID budget:
- Magnet school services: these are the expenses for running Harambee and Crosswinds.
- Shared member services: these are the expenses associated with services that EMID provides to all member districts. This includes a resource center, teacher training, AVID services, and much more.
Prior to FY2008
Prior to FY2008 EMID member districts sent $46 of their PPU integration funds to EMID generating $4,000,000 annually for magnet school and shared member services. During this time they also sent all levy dollars associated with each EMID student to EMID.
The district leadership prior to FY2008 also realized that EMID faced two significant fiscal challenges that regular school districts did not: EMID has no levy authority of its own and EMID cannot engage in any long term borrowing. This made it imperative that EMID set aside money of its own for a “rainy day.” By the end of FY2008 this “fund balance” had grown to nearly $4,000,000.
FY2009 to FY2012
During FY2008 the EMID Board decided that the various levels of levy funding constituted an imbalance in EMID funding from each district. To make EMID membership costs fairer for those member districts who had a higher number of their resident students choosing to attend the EMID magnet schools, the board decided to eliminate levy funds from the EMID budget. To make up for some of this lost revenue, they raised the portion of PPU integration funds sent to EMID by member districts from $46 to $52 PPU. Saint Paul, which is exempt from the PPU charges but had been sending levy dollars, agreed to take over funding EMID’s Multicultural Resource Center. This change took effect with the FY2009 budget.
The fund balance reached its peak of $5,000,000 and stayed there through FY2010. However, EMID board members then began to question such a relatively large reserve and insist that the district begin to spend it down. To accomplish this, the board intentionally authorized deficit spending on shared member services and the reserve funds declined to roughly $3,000,000 by the end of FY2012.
During the FY2012 school year the EMID Board tried to close down the EMID Schools. After hearing community concerns, this plan was set aside. Instead the board decided to reduce the portion of PPU integration funds sent to EMID to $30. They also stipulated that none of these funds could be used on magnet school expenses. The schools were expected to be sustained purely on the backpack funding.
The deficit spending on shared member services was compounded by new deficit spending on the magnet schools. Moving the schools to purely backpack funding would require a 30% cut in the 2012-2013 school year, so the board authorized $1,800,000 of reserve funding for the schools and a 15% cut to the school budget. It is now projected that only $900,000 will remain in the fund balance at the end of FY2013.
The EMID Board realized that they were creating an unsustainable funding model for the magnet schools when they approved the FY2013 budget. There was discussion at board meetings in early 2012 about the need for member districts to step up with some portion of their levy funding to help make the EMID budget manageable. Even though Article 12.A. of the EMID Joint Powers Agreement states that “financial support for students attending the EMID School District shall be comparable to that from which they would have benefited if they had attended Member District schools,” as of October 2013 there has been no progress on the levy front. This is a loss of over $700,000 to the EMID budget.