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Helmut Schmidt, Published January 07 2013

Local officials want some of North Dakota's budget surplus for K-12 needs

FARGO – With state coffers showing a healthy surplus, local officials hope more money can be directed to K-12 education in a broad range of areas during the legislative session starting today.

Fargo and West Fargo public school leaders want lawmakers to pay per-pupil state aid in the year children walk in the door, a move that could mean

$2 million a year in funding for the fast-growing West Fargo School District.

Fargo School District officials have their sights set on the future. They hope lawmakers will change an excess mill levy law they believe usurps local control of school funding and could cost the district millions annually in property tax revenue starting in 2015.

The Fargo and West Fargo districts want per-pupil funding to increase from the current $3,980 per student, and just as importantly, they’d want that funding to arrive in the same school year as a student walks in the door.

School districts now receive funding for students a year after they walk in the door. It’s a system that works fine if schools have stagnant or shrinking enrollments, but becomes a concern when a district is growing – such as in the state’s larger cities and the Oil Patch.

For example, when it opened its doors in August the West Fargo School District had about 570 more students than the year before. That meant the district had to budget another $2.3 million to pay for those students, Business Manager Mark Lemer said.

“We feel it is imperative that we are funded in the current year,” School Board member Karen Nitzkorski said, calling the issue West Fargo’s No. 1 priority.

“We had (570) more kids this year and we’re getting paid last year’s amount,” she said.

While West Fargo schools will get $1 million of that back this year from a fund for fast-growing districts – the fund was set up with helping Oil Patch counties in mind – it will have to hope for a deficiency payment from the state to make the district whole, Lemer said.

Next year, West Fargo expects to add 473 new students, Nitzkorski said.

“That’s significant, if we’re funding again by this year’s formula, and by the number of kids that showed up this year,” she said. “Again, we’re going to be losing a potential of not quite $2 million. So it’s very important to us.”

Long term, if the funding model is changed to allow for same year per-pupil state aid payments, West Fargo will probably be able to maintain its fund balance at 15.5 percent of its budget through 2015-16. But if things stay the same, that balance – used to pay the district’s bills while it waits on its revenues to come in – would dip to 6.1 percent as it’s bled away to balance budgets, district figures show.

Fargo public schools had 200 new students last August and won’t be paid for them until fall 2013. That means the district had to pick up about $756,000 in extra costs this year, Business Manager Broc Lietz said.

State aid vs. control

If West Fargo has a worry, it’s that state lawmakers might decide to take on a much larger percentage of the cost of education in return for having fewer mills taxed locally, Nitzkorski said.

She said it would mean more than simply a shift in where the funds come from. There’s a potential shift in how much say the state has in running schools.

“We want local control,” Nitzkorski said.

It’s also a problem if the good times brought on by the oil boom end, and state budgets get tight again, she said.

“There’s a good example in the state right next to us (Minnesota),” she said. “We’d hate to get into a similar situation.”

Excess mill levy

About a dozen North Dakota school districts, including Fargo, must either cut their general fund levies to 110 mills, or get voter approval before 2015 to maintain those levies.

The general fund mill levy cap was put into place by the 2009 Legislature. It went hand-in-hand with lawmakers voting to have the state provide 75 mills of property tax relief to all school districts, Lietz said.

If the “excess mill levy” restrictions stay in place, and the Fargo district doesn’t get voters to OK keeping the general fund levy at 191.18 mills, it will see big cuts in revenue, Lietz said.

District income from what it levies would be frozen at 2014 levels, Lietz said. They’d remain frozen until the district either cuts its levy, or revenues eventually equal the value of 110 mills.

(Only revenue from property taxes on new construction is exempt from the rule, Lietz said.)

Lietz said projections call for $2.5 million less revenue in 2015 if no changes are made in the way the district operates.

By 2017, the gap rises to $6.6 million. By 2018, the gap could be $8 million to $10 million, Lietz said.

“(The law) takes a little out of local control, which is contrary to what we normally have with our schools,” Fargo Superintendent Jeff Schatz said.

Schatz said if the district gets funding in other areas, it would help Fargo shed general fund mills.

West Fargo School District’s general fund levy is at 110 mills, so it is not affected by the excess mill levy rules, Lemer said.

Other funding wishes

Both districts want more funding for special education, English Language Learners, and early childhood education.

Readers can reach Forum reporter Helmut Schmidt at (701) 241-5583

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