Monticello schools plan cuts and explore voter levies as enrollment decline squeezes budget

Superintendent Eric Olsen and Director of Business Services Tina Burkholder told the Monticello Public School District board on March 3 that declining enrollment has pushed the district toward budget realignment and that district leaders are preparing staff and buildings for staffing changes and other reductions.

Olsen said the district’s primary revenue source is state aid: “The largest source of our revenue comes from the state, 76%,” and noted that both state aid and property tax revenue are driven by student enrollment. Burkholder told board members the district aims to hit a minimum unassigned fund balance of 8% of expenditures next year under its fund-balance policy (target range 8–16%). She said the district ended the prior fiscal year at 9.2% but after the current revision expects to end this year at about 7.88%, below the policy minimum.

The nut graf: With nearly 80% of spending on salaries and benefits, administrators presented a two-round realignment that prioritizes keeping cuts as distant from classroom instruction as possible while meeting a fund-balance target. Financial advisers from Ehlers described voter-based tools the board could use to shore up recurring revenue and explained timing, tax impacts and legal limits for those options.

Board presentation and planned reductions

Burkholder and Olsen said the district began budget season in November and used a multi-step process. Round 1 addressed cross-district inconsistencies and operational efficiencies; round 2 assigns specific dollar targets to buildings and departments. Burkholder summarized current round-2 targets in broad categories: $51,000 from district departments, $76,000 from activities and roughly six-figure reductions at several buildings (examples cited in board presentation included Eastview Education Center/Nature Base $38,000, Little Mountain Elementary $57,000, Pinewood Elementary $76,000, middle school $76,000, and high school ALP $134,000).

Burkholder explained typical mechanics of realignment: “We pause every year to see what we can afford and how many FTEs we can afford before we go any further with the budget process,” and gave examples of how class-size and grade-to-grade enrollment variations can require FTE reductions at the building level. She said building principals will meet with employee groups and hold individual staff meetings prior to spring break; staffing realignments then will be presented to the board through personnel matters in April and May.

Ehlers presentation: renewals, referendums and capital levies

Matthew Hammer and Beth Downs of Ehlers Incorporated, the district’s financial adviser, walked the board through how state aid, local levies and voter-approved authorities interact with enrollment-driven revenue shortfalls.

They emphasized two locally controlled options: an operating referendum (per-student authority) and a capital-project (technology) levy (a tax-rate authority). Ehlers explained that the district currently receives roughly $3.1 million annually from an operating referendum authority (about $672 per pupil for FY25) and that a 2023 law lets boards “board renew” an expiring operating referendum once at the same dollar amount and term instead of returning to voters. Hammer said most districts in prior cohorts chose renewal rather than reballoting.

Ehlers also explained that a capital project levy — commonly used as a technology levy in other districts — is a different type of voter-authorized authority spread on net tax capacity; it can fund recurring technology, curriculum, transportation fleet purchases and related costs and can free up operating funds for staffing/programming. Hammer cautioned that a capital levy’s tax incidence and revenue vary with changes in the district’s tax base; the operating referendum is spread on referendum market value and is per-student.

Timing and fiscal effect

Ehlers reviewed timing: a successful voter question in 2025 would generally produce voter-authorized revenue recognized for the district’s FY2027 budget (July 1, 2026–June 30, 2027). They provided a hypothetical $1 million illustration showing different tax effects depending on levy type and property classification, and noted that district voters’ willingness, the district’s tax-base composition and statutory caps all affect feasibility.

What the board was told and next steps

Burkholder reminded the board that the district’s fund-balance policy target (8–16%) is designed to cover unknowns; she said an unanticipated drop — “we had over a hundred fewer students show up this year” — materially reduced revenue. Olsen said enrollment work and a marketing plan are among district levers the administration controls.

Ehlers told the board it could explore scenarios if it wanted to consider a capital-project levy in addition to or instead of relying on operating referendum renewal. Hammer said many districts pursue capital levies to free up existing operating budget lines; Downs and Hammer offered to run scenarios for the board.

The board received the presentation; no formal vote on levy questions occurred at the March 3 meeting. Administrators said they will continue building-level meetings, finalize staffing proposals and return staffing items for board action in April and May.