Frequently Asked Questions

Below is a collection of questions about the 2021 Referendum divided by subject. New FAQs will be added as needed and noted to when they were added. 

The Plan

• What happens if the referendum is approved?
  • If the referendum is approved, New London-Spicer would see an improvement to our financial situation, allowing us to reverse some of the cuts implemented in recent years that have negatively impacted students. The referendum would also allow the district to maintain and increase an already robust academic program; increase mental health supports for all students in PreK through grade 12; increase curriculum, instruction, assessment, and oversight to further improve teaching and learning opportunities; maintain technology infrastructure and a 1:1 platform; as well as return to smaller class sizes.

• What does each ballot question mean for the district?
  • If approved, Question 1 would put in place a voter-approved operating levy of $1,020 per pupil, up from the current level of $0, to provide increased revenue for everyday operations including teaching and learning, programming, and student support. Some of the recent cuts made by the district will be able to be reversed and we will continue to evaluate our expenditures and make necessary reductions while stabilizing our fund balance (savings account). 
  • If approved, Question 2 would allow for annual increases tied to inflation. Question can still be approved even if question 2 is not and would allow the district to avoid additional cuts down the road, but not as long-term as if both questions were approved. Budget reduction in the future will be part of the equation above and beyond what we do annually, anyway. 

• What happens if the referendum is not approved?
  • If the referendum is not approved, the district would continue to face a worsening financial situation with a low fund balance, more annual cuts, increasing class sizes, and reduced programming. We have been aggressive in making cuts to our budget to address our financial situation, but the situation is worsening. An increase in revenue is the only way to improve our financial situation and prevent us from Statutory Operating Debt (SOD). When a district finds itself in SOD, the State of Minnesota gets involved in district operations and if the district cannot turn its fund balance around and continues deficit spending, they can lose state and federal aid.
• Why is the school district asking for more revenue per pupil than the state average? (Added 9/30/21)
  
  • Our business manager and financial planning consultant worked with us to find the revenue amount that would allow us to fund the educational priorities identified in our community engagement process. This level of revenue will allow us to reduce our class sizes to their original sizes, add back elective courses for students, reduce bus route times, improve teaching and learning by reinstating professional development for staff, provide additional mental health supports, and increase financial stability.

Comparisons

• How do New London-Spicer taxes compare to our neighbors?
  • Our district does not currently have a voter approved operating levy in place and the failure of the proposed 2020 referendum means that our situation is worsening despite our efforts. Districts around the state have been turning to operating levy referendums to address the lack of funding in state aid, and allow for robust programming. Most of our neighboring districts have voter-approved operating levies in place and the state average for an operating levy is $849. New London-Spicer has the lowest school taxes of our neighbors for residential properties and among the lowest for agricultural properties. 

• How do we compare to our neighbors when it comes to fund balance?
  • Different school boards have different financial viewpoints. The former NLS School Board had a philosophy to keep the fund balance low to demonstrate fiscal responsibility and a cost-conscious management style. Today, best financial practices suggest anywhere from 30% or higher fund balance in order for a district to be in a more resilient position in the face of emergencies and opportunities that arise and to avoid paying interest for daily operational spending. Over the years, we’ve kept our expenditures in order and have managed with a low fund balance but an increase in revenue will eventually be needed.

• What percentage of school districts in Minnesota have a voter approved operating levy? (Added 10/5/21)
  • According to Schools for Equity in Education, the percentage of districts with voter approved referendums is 70%, 231 districts out of 329 total.

Finances and Operations

• What has the district done to improve its financial situation?
  • We have made the following budget cuts:
    • In the fiscal years 2006-2019 the district made $2,240,229.14 in cuts
    • For the 2021-22 fiscal year, the district has made $962,818.77 in cuts
    • The district is currently proposing $379,952.98 in cuts for the 2022-23 fiscal year
  • These cuts directly impact students with reduced opportunities for students, increased class sizes, student support, and elimination of programs and activities.
  • In addition, the district has kept borrowing down. In the past, the district paid higher than average interest costs due to short-term borrowing to cover cash flow. In the last few years, we have saved money by borrowing on a Line of Credit for a couple months to cover bond payments that we could not cover with cash flow.

• How would the district’s financial situation be different if state aid kept pace with inflation? (Updated 9/21/21)
  • If state aid had increased at the rate of inflation, schools would have received $7,461 per student this year. Instead, schools will receive $6,863 per student, a different of $598 per student. New London-Spicer has about 1,530 students. If state aid kept pace with inflation, that would result in nearly $1 million in additional state funding in one year, and many millions over previous years, eliminating the need for constant budget cuts.

• Why does the district have such a low fund balance policy of 3%? 
  • In past years, our school board set a very conservative fund balance policy and aimed to operate as lean as possible. While this financial strategy did work for a time, it simply does not work in this day and age with under-funded state sources, federally mandated expenditures, increasing expenses, and other unanticipated challenges. Where once a low fund balance was not only prudent but appropriate, it is now a detriment to programming and day-to-day operations. The State is not keeping pace with inflation and we are seeing increases in special education cross subsidy costs, curriculum instruction, and technology changes, all of which combine for a perfect storm for our district. We want to keep taxes low and are at a crossroads and need to make decisions and remedy our financial situation. 
    
    
• Have COVID-19 Dollars Helped the District?
  • Yes, these dollars have helped the district when it comes to COVID-19 expenditures. It is anticipated we’ll see a net negative impact to our budget after final calculations are complete.
    • In-flows forecasted to be $1.6 million
    • Out-flows forecasted to be $1.9 million

• The state just gave schools a large amount of money, why do you need more?
  • In 2021, the state approved an increase in the state formula that determines how much money schools get based on the number of students in a district and other factors. The formula increase is 2.45 percent for the 2021-22 school year and 2 percent for the following year. In addition, schools will receive $10.4 million in reimbursements for special education costs (on average, $31,515 per district), $4 million over the next two years for programs for students for whom English isn’t the primary language spoken at home, and $33.5 million over the next two years for programs that aim to attract, train and retain non-white teachers.
  • We are very happy to have the additional funding - every revenue increase helps. However, the formula increase is still just a bit over inflation, and, over time, state revenue increases are still far below inflation. Essentially, this means we are in continuous budget reduction mode unless additional revenue, such as an increase in local property tax, is found.

• Has enrollment for special education increased or has the cost to provide special education increased? 
  • Both have increased. NLS has a strong special education program with high quality staff and that reputation is well known.
    

• How have accounting practices changed over the last two years? (Updated 9/10/21)
  • Although general accounting practices, such as, legal requirements for coding revenue and expenditures have not changed, the philosophy of our district’s overall financial portfolio has. In the past, the district’s fund balance policy was set at 3%. A fund balance this low is not enough to continue our excellence in education, improve our current programming, or maintain a strong financial outlook. Our current S&P Rating is A- with a negative outlook, which can become problematic. When the district refinances loans or needs to cash flow borrow (a type of debt financing), we are then assessed at a higher interest rate. By improving our accounting philosophy, which the referendum will do, we will be in a position to build a savings account (fund balance), increase our S&P rating, and not cash flow borrow.

• How does open enrollment into the district impact revenue to the district? 
  • The dollars follow the student into our district and is a net positive, but considerations like space, staffing, and resources need to be considered for the future. The district will monitor these factors going forward and take them into consideration when making decisions around open enrollment.
    

Previous Projects

• How did you pay for the turf field and performing arts center?
  • Schools have multiple ways they can finance construction projects. These projects, and the replacement of the running track, were each completed using different funding sources.
  • The bond levy approved by voters in Nov. 2015 paid for facility improvements at Prairie Woods Elementary and at New London-Spicer Middle and High School, including the performing arts center. This long-term project was completed in May of 2018.
  • The running track and synthetic turf field were completed in summer of 2017. The school district sold bonds to raise money to pay for the running track and turf, but the bonds are short-term and are being paid off with different funding sources. State aid for replacing worn out facilities (called Long-Term Facility Maintenance funds) are repaying the bonds for the track. A lease levy, a funding mechanism approved in state law to allow schools to add or replace educational space, is paying for the turf. The track was unsafe and needed to be reconstructed. The school board decided to replace the field turf at the same time so the track would avoid possible damage if the turf was replaced later. Synthetic turf significantly increases the number of uses of the field, as it can be used for varsity and junior varsity games, practices for many sports, physical education classes and community uses. The grass field was reserved almost exclusively for varsity sports. 
    
    
• Does New London-Spicer place a focus on athletics instead of academics?
  • No. There is a myth that NLS has too much of a focus on athletics. The reality is that 99% of our staff focuses on academics. The rumor out there that we spend an inordinate amount of money on athletics is untrue. Our expenditures are really 3-5%. We take a coach bus to games when the teams reach a certain level of competition, but the booster club pays for those buses, not the district.

General Referendum

• What is the difference between a bond and an operating levy? 
  • Bonds are for buildings. Levies are for learning. An operating referendum is an election asking voters to provide funds that the district uses to run and operate its schools. An operating levy is for running the educational programs at the school and goes to the district’s general fund to support students.
  • Bond levies are for funds that the school district uses for new construction, updates to existing facilities, and other additions to school properties. Each fund remains separate and cannot be used for another purpose.

• How do schools impact the community?
  • According to the National Bureau of Economic Research, there is a definite correlation between school expenditures and home values in any given neighborhood. A report titled, “Using Market Valuation to Assess Public School Spending,” found that for every dollar spent on public schools in a community, home values increased $20. These findings indicate that additional school expenditures may benefit everyone in the community, whether or not those residents actually have children in the local public school system. 

• Can I deduct the taxes paid on my State and Federal Income Taxes?
  • If you itemize deductions for federal income taxes, you may deduct all property taxes paid.

• I do not have any students in the district. I am on a fixed income. How would the referendum be meaningful to me?
  • Education is the first step to an effective workforce. What students learn today could fuel the New London-Spicer Schools community’s economy tomorrow. Our district provides students with opportunities to explore different career paths and prepare for the work they’re passionate about as soon as possible. The referendum provides both additional funds for student learning and improved facilities to further our initiatives to provide a great learning environment for our students.

• How do different types of properties pay into an operating levy compared to a bond? 
  • For an operating levy referendum, seasonal recreation properties are exempt, and agricultural properties are taxed only on the value of the house, garage, and one acre. All of those properties would pay into a capital levy or bond (building) levy at a similar rate as a homeowner. The 2021 New London-Spicer Referendum is an operating levy referendum.