Banners hang in the commons at Petersburg High School (Joe Viechnicki/KFSK)

Petersburg’s school board passed a budget Tuesday that would spend down the school district’s reserves, although that could improve with final decisions on the state budget. Administrators are not counting on additional money from the state government and board members expect that could mean tough decisions for school programs in the upcoming year.

The district is planning on a drop in state funding because of declining student enrollment numbers. On a radio call in program this month, superintendent Erica Kludt-Painter said families with kids have been leaving town.

“Even with all the positions and jobs in town, this is an expensive place to live anyway,” Kludt-Painter said. “And then you sort of add in the rising costs. We understand, people are trying to keep grocery stores open and hardware stores, all those things. I get it from an economic perspective but we do have families, they just flat out can’t afford to stay. We had a number of those cases in those last few weeks of school that really, and they’re not just saying they’re going, they’re going, they’ve got plans.”

Administrators are not filling some vacant staff positions in reponse and they’re planning on other spending cuts.

425 students is the cutoff for state funding of three schools, and the district was at 426 students this year. This budget is based on an enrollment of 413 although district officials think that number could drop lower. That would be the lowest enrollment for the Petersburg district in decades. It means a big reduction in state funding, but that blow could softened depending on budget decisions by the governor. The legislature approved a small increase to the state’s per pupil funding formula and a one-time payment of $57 million dollars to districts statewide. However Kludt-Painter said the district was not counting on that additional money.

“We are very, very confident that there will be additional funding that will buffer this budget and make it look much better than it does right now but we don’t make any assumptions and we don’t have that in writing from the governor at this point,” she said.

The one-time state funding could mean an additional $262,000 for Petersburg schools, greatly reducing the loss from declining student enrollment. This budget anticipates a drop in state funding because of that declining student enrollment of $386,766.

Another big challenge is rising costs for the district. The largest the district saw during the past year was a 77 percent jump in the cost of heating fuel. The local government has also boosted the cost of utilities and the district expects to pay 28 percent for electricity, water, sewer and garbage.

Finance director Karen Morrison told the school board that cuts would be across the board if the budget remains as is.

“This budget does represent reduced supply budgets district-wide,” Morrison said. “There’s not professional development built in. There’s not curriculum adoption. Reductions are going to be across the board, teaching, technology, maintenance, student transportation. It’s a bare bones budget. And hopefully what Erica and I are hoping is this is the worst case and we’ll be able to come back in the fall and be able to say our, hey our numbers are either up, or we found money, or the state’s giving us money to help cover our heating fuel.”

This budget puts expected revenue at $7.9 million while anticipated spending would top $8.6 million. That means the district would spend down its reserves to make up that deficit. Morrison said that would leave that fund balance at $403,697 at the end of the year.

“So that’s the not-so-great news,” Morrison said. “We’ve never had it this low since I’ve been at the district. We’re doing everything that we can though to leverage our funds and be conservative.”

A waiver on the 10 percent limit for that fund balance has helped the district save more money than usual. The schools have also used federal pandemic relief funding. And this year the district asked for and received 200-thousand dollars more from the borough government.

Board president Sarah Holmgrain was appreciative of that additional funding. But she noted some of that money would be paid back to the borough for increased utility charges.

“As you’ve shown and said time and time again, so much of our costs are fixed,” Holmgrain said. “And we have been successful for many years but at the cost of what? $200,000 doesn’t go very far when you’re seeing increases of fuel costs doubling and you’re seeing utilities, which they get that money back. So you’ve got an increase of 35 percent here, another increase over here, they get all that money back from us.”

The board approved the budget on a 4-0 vote with board member Megan Litster not at the meeting. They typically revise that spending plan during the school year with actual enrollment and state funding numbers.

In other news, the superintendent updated the board on plans to apply for state funding to replace the roof on the middle and high school building. That involves paying for a condition report of the existing roof and applying to be on the state’s Capital Improvement Project list.

“I have no doubt we’ll end up on the list, we’ve gotten through the process multiple, multiple times,” Kludt-Painter told the board. “I’m very confident we’ll get there. It won’t be this year. It will be in probably the 2024 cycle, which it will take us every bit of a year to get through that process that we have to do.”

The application from Petersburg schools would compete against requests from other districts. And if Petersburg’s successful, it would have to fund a portion of the work, at least 30 percent. Kludt-Painter told the board she intends to ask the borough to cover that cost from the borough’s federal payment under the Secure Rural Schools program. It’s too early to know any dollar amounts. The district has completed other major projects using that state funding program including food service improvements, siding and window renovation at the elementary school as well as boiler and fuel storage tank replacement.