Fridley superintendent outlines statutory operating debt plan, cites audit delays and coding errors

Dr. Lewis told the Fridley Public Schools board on Feb. 17 that the district's external audit remains incomplete because auditors and the Minnesota Department of Education (MDE) have identified long‑running coding errors dating back to 2017. "Our auditors really want to be diligent…they continue to believe that we have coding errors back to 2017," she said.

The superintendent framed open enrollment, special‑education program growth and operational fixes as central to the district's path out of statutory operating debt (SOD). She said Fridley meets the statutory SOD plan guideline already submitted to MDE and emphasized that state oversight requires a detailed corrective plan and regular reporting until debt is eliminated. "The plan for Statutory Operating Debt…is really built on staying the same as our 10/01/2025," she said.

Dr. Lewis provided several fiscal figures during the presentation: base general‑education aid approximations of $10,838 per K–6 student and $13,006 per grade 7–12 student; roughly 49.5% of the district's students open‑enroll into Fridley, generating nearly $12 million this year; and open‑enrollment outflows in 2025–26 represented about $13 million in lost revenue. She said the district's 24‑25 revenue projection was about $53 million against budgeted expenditures of roughly $64 million, producing a negative fund balance she summarized as approximately $8 million in statutory operating debt, subject to audit revision.

On programs, Dr. Lewis described expansion of federal setting 4 services (the highest level of special‑education placement) as both a programmatic priority and a fiscal strategy. The district now hosts setting 4 in multiple buildings, serves students from other districts under tuition agreements, and bills portions of central‑office salaries through those agreements. "Setting 4 is a pretty significant part of our SOD plan," she said, adding that the program also aims to improve student safety and outcomes.

Operational steps include a review of contract services, correcting accounting coding errors, consolidation of some district office roles and the implementation of budgeting procedures within the finance department. Dr. Lewis said the board will receive monthly financial reports, enrollment tracking and quarterly SOD updates. The board asked for a more detailed breakdown of open‑enrollment origins and grade‑level gains; Dr. Lewis said she would provide those numbers at a future meeting.

The superintendent also noted that some grants the district expected have been paused or delayed at the state or federal level, which affects near‑term cash flow. She defended the district's priorities, saying that MDE has been "very responsive and very helpful" and reiterating that corrective steps should not fall "on the backs of students." The district plans to pursue revenue enhancements and additional grant funding while protecting core classroom instruction and required special‑education services.

What's next: the board will receive more detailed audit results when the external audit is finalized and will monitor the SOD corrective plan, which MDE requires to show annual progress toward eliminating the debt within three to five years.