North Dakota school officials line up to oppose bill targeting their budgets

BISMARCK -- Education officials lined up in opposition Tuesday to a bill that would slash kindergarten through grade 12 annual ending fund balance levels.

Educators maintained that a compromise needs to be reached.

“Allowing school districts to carry over a reasonable amount of money allows districts to be proactive and to plan for the future,”   Mandan School District Superintendent Mike Bitz said.

The House Education Committee held a hearing on House Bill 1218. Committee chairman and primary bill sponsor Rep. Mike Nathe, R-Bismarck, said HB1218 would reduce the cap on a school districts’ general fund ending year balance from 45 percent of expenditures down to 10 percent or $300,000, whichever is greater.

“Some of the schools … are sitting on rather hefty ending fund balances,” said Nathe, adding that the statewide average ending fund balance is 23 percent.

He said that HB1218 isn’t meant to be punitive and the percentage and dollar amount in the bill likely can be negotiated between the committee and education stakeholders.

“I think the committee can come to a number that protects the taxpayer,” Nathe said.

Aimee Copas, executive director of the North Dakota Council of Educational Leaders, said the 10 percent or $300,000 number was too low.

“Many states understand that for schools to appropriately operate like a business, a healthy carryover balance is necessary,” Copas said. “To limit a school district’s ability to plan for the future would not in any way represent sound fiscal management and would put any business at risk for financial failure with one misstep or crisis.”

Copas said, during the interim after the last biennium, a legislative focus group with the North Dakota Association of School Administrators looked at the issue to determine what a potential compromise could be. She said their efforts led to a proposed 20 percent ending fund balance as well as $250,000.

“The 20 percent protects the larger districts and the dollar amount serves the smaller district with a smaller overall operating budget,” Copas said.

Bitz, who supported the compromise put forward by Copas, said the district’s current ending fund balance is more than $7.5 million. He said this amounts to a 21 percent ending fund balance for 2013-14 and their ending fund balance as of June 30 is expected to be down to 17.5 percent.

He said it sounds like a lot of money but would only support approximately two-and-a-half months of district expenses.