Finance Facts

The primary focus for district staff since March has been on providing distance learning and supporting our community during the COVID-19 pandemic. As good stewards of our community’s schools, we also need to run the school district, which includes managing our finances.

At the July 13 School Board meeting, the Board voted unanimously to place two school funding requests on the November 3, 2020 ballot. Question one would renew the district’s existing operating levy. Question two would phase-in increases to that levy, with no property tax increase until 2022. Read more here.
View the referendum recommendation approved at the July 13 School Board meeting here.

A Shared Partnership

Education funding is a shared partnership between the state and federal governments and our local community. In Owatonna, 82% of our funding comes from the state, 4% from the federal government and 14% from property taxes and other local sources.

Unfortunately, state funding - which is the bulk of our revenue - has not kept pace with inflation or increasing educational costs. If state funding had kept pace with inflation since 2003, Owatonna Public Schools would have received an additional $3 million last school year alone.

It takes resources to provide our students with the education they deserve once they are in the classroom. Required academic and support programs cost the district nearly $7 million more than it receives each year from the state / federal governments.

How Do We Compare?

Our voter-approved operating levy is in the bottom third of the Big 9 schools - and lower than Faribault and Northfield. These levies are one way local communities support their schools and help pay for school operating costs.

The operating levy approved in 2013 will expire next year, unless it’s renewed in November 2020 by our voters. If our operating levy is not renewed in November 2020:

We will lose $2.5 million per year, requiring cuts to programs and services
These cuts would be on top of $500,000 already cut in 2019-20 and $2 million in cuts planned for 2020-21

Working Hard to Stretch Each Dollar

We do our best to stretch every dollar. We strive to be as efficient as possible while maintaining a quality education for our students - but this is becoming increasingly difficult. We work hard to keep a reasonable fund balance for financial stability, cash flow and unanticipated expenses. The fund balance varies over time as we try to adapt to the state and federal funding gaps. For the first time in several years, we are projected to fall below the Board’s fund balance goal.

Our long-range outlook shows expenses outpacing revenue, which means only renewing the levy will not be enough to maintain the educational programs our students deserve and our community expects.

Providing Financial Stability

When expenses outpace revenue, there are three options: cut expenses, increase revenue through an operating levy, or both. By law, local voters have the opportunity to provide additional funding for their schools to pay for classroom materials, staff costs and other operating expenses.

The School Board and district leadership have reviewed a number of options for how best to address these financial challenges and maintain the quality education our students deserve and our community expects. At the July 13 School Board meeting, the School Board voted unanimously for a shared approach, with belt tightening on the district side … and a request to voters to increase the operating levy on the community side.

The district will make $5.25M in cuts over the next three school years - and voters will be asked to approve an increase in the district’s operating levy through two school funding requests on the November 3, 2020 ballot. The first question is for a simple renewal of the district’s existing operating levy which is about to expire. The second question is for phased-in increases to the district’s operating levy in 2022 and 2025. By phasing in the increase over time, it also phases in the tax impact with no tax increase until 2022.

Read the press release about the Board’s decision here.

We've Kept Our Promises

Our community has trusted us by approving an operating levy to help fund school programs and services, and bonds to build, improve and maintain our schools - and we’ve kept our promises!

Balanced budgets every year
Maintained a reasonable fund balance for cash flow and unanticipated expenses
Saving taxpayers money with lower than anticipated interest rates on 2019 bond

We are also proud that our district has consistently been recognized for its financial management by receiving:

The Association of Business Officials International Certificate of Excellence in Financial Reporting for 26 consecutive years
The Minnesota Department of Education’s School Finance Award for fiscal health and timely and accurate submission of financial data and reporting criteria for eight consecutive years

Bonds are for Buildings, Levies are for Learning

We are so grateful to our community for their past support. In 2019, the community approved bonds to build the high school. The last time the community approved an operating levy was in 2013, and that levy is about to expire. It’s important to know that budgets for buildings are legally separated from budgets for operations. Bonds can’t be spent on programs - and operating levy dollars are used to support classroom learning and related expenses.

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