MARSHALL — The Marshall School Board is projecting an overall deficit of $1.1 million across all funds for the 2024-25 school year ending balances.

“I am basing this on what was previously budgeted. Overall for the budget, we originally were expecting a deficit of about $766,000, and now that deficit is more along the lines of $1.1 million,” Marshall Director of Finance Sarah Kirchner said at Monday’s school board meeting. “Unfortunately, those numbers didn’t go in the right direction after these projections were adjusted.”

The major changes from last year to the current school year primarily came from increased salaries, to which Kirchner said there were several contract negotiations that took place last year.

Kirchner has been working on the revised budget projections as the district goes through its yearly audit.

“Other things we want to touch on is what this actually does to our percentage of the fund balance, which we look very closely at. We primarily focus on our general fund balance, that’s our biggest fund out of all the funds we have,” Kirchner said. “Focusing specifically on the general fund, that total deficit is $1.3 million. Some of our other funds have a positive balance, so that reflects the change between the $1.1 million (overall deficit) to $1.3 million specifically in that Gen-Ed fund.”

The general education fund saw an increase of funds of about $224,769 between the original projected fund balances and the current revised budget, which plays into the $1.3 million deficit for that account.

“From a revenue perspective, I was able to increase our general-ed aid, which is our largest sum of funds that we receive for the year in the general fund,” Kirchner said. “Special (education) is another significant amount of funding that we receive. I just double checked any updates that were made by the state to our special ed funding, which increased the projections to about $135,000 more than what was budgeted for revenues.”

Along with the general education deficit for this school year, food services is expected to see a $65,500 deficit and community service is projected at a $285,895 deficit. Transportation may see a $215,706 excess, capital outlay at $77,299 and debt services is projected to see an $288,756 excess.

“Our fund balance ending 2024 was 21% for general. Based on these projections, our fund balance percentage will drop down to about 16.85%. We do have a minimum required balance of 8% that’s set by policy,” Kirchner said. “It’s going to be really hard to plan the same amount of expenses for next year, knowing some of the major factors that we’ve already been talking about, which includes our insurance premium increases … We also have the MEA (Minnesota Educators’ Academy) contract negotiations coming up, also assuming there will be an increase to expenses there for salaries and any other contract salary increases that are already planned for this next year that are set.”

The fund decrease from 21% to 16.85% could have an impact on a week to week basis.

“Just to give you some perspective on what that is in actual dollars, basically at a 21% fund balance, that equates to like $10.7 million … That’s only two and a half months of our expenses that go out the door. We have about $4.2 million every month that we’re paying in salaries, expenses and that kind of thing,” Kirchner said. “If we get down to that 8%, that’s one payroll for half of a month of expenses. That is not a comfortable place that we want to be at, at that 8%, which is our policy. I would much rather see us in that 15% range, just so we have the comfort of being able to pay our bills.”

To help make up for funds, the board has recently put in place an Early Retirement Incentive, which they approved the first four of at Monday’s evening.

The early retirement plan gives the option to Marshall school teachers who have been with the district for 15 years and are 55 years of age or older to retire with an extra monetary incentive. Those who chose to retire are allowed to be employed as a substitute teacher if they wish.

Detailed on the early retirement contracts, a $15,000 incentive is applied if one to four teachers retire, $18,500 for a group of five to eight and $20,000 for nine or more. The incentive funds are deposited into the teacher’s health care plan savings account. This allows the district space to hire other teachers if needed at a starting salary wage.

“From an expense perspective, I’m not seeing a lot of hope from the state and federal government right now with increases to revenues to make up such a dramatic deficit that we’re looking at,” Kirchner said regarding the district looking inside for areas to apply reductions.

The district will find out where official numbers land at the end of the audit, which they will receive around the end of August.

The budget projections are publicly available to view on the district’s school board website under the March 3 meeting date.

The board mentioned with results of the audit and moving into the next school year, they may possibly discuss plans about an operating referendum that would go to community members to vote on to bring in more money. Marshall Public Schools currently does not have an operating levy.