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Dept. of Education denies LP School Board request to transfer funds
Aug. 27, 2012

By Ivan Raconteur

LESTER PRAIRIE, MN – Lester Prairie School Board learned during last Monday’s meeting that the Minnesota Department of Education (MDE) has denied the district’s request to transfer funds to pay for items related to the building improvement project.

July 2, the board asked the MDE to approve a transfer of $806,800 from alternative facility restricted/reserve 409 in the building construction fund to the operating capital restricted/reserve 424 in the general fund.

In a letter dated July 26, the MDE denied the request, stating it does not meet the requirements for approval under the law.

In part, the letter notes that “the commissioner must approve a request for fund transfer if the transfer does not increase state aid obligations to the district or result in additional property tax authority for the district.”

McNulty said the request would not increase taxes, but not doing the transfer would decrease taxes, because the health and safety assessment (levy) would be reduced. He explained that, according to the MDE, not decreasing taxes is the same as increasing taxes.

The denial letter from the MDE states “Per Minnesota Statutes 475.65, funds remaining in the building construction fund after completion of an approved project are to be transferred to the debt service fund. Under Minnesota Statutes, section 475.61, subdivision 3 (e), excess debt redemption funds must be used to reduce levies.”

The letter further states, “A transfer to restricted/reserved operating capital balance will result in an increase in district property taxes, as the debt excess that would result from transfer from the building construction fund to the debt service fund will not be available to reduce property tax levies.”

The district could, according to the letter, “opt to increase health and safety levies to complete those projects that qualify under Minnesota Statutes 123B.57. The reduction in the debt service levy as a result of the transfer from the building construction fund to the debt service fund will allow the school district to accomplish this without a net increase in property taxes.”

Another option, according to the letter, would be for the district to ask voters to approve a small bond issuance to fund the additional work.

The next step, according to McNulty, is for him and one school board member to meet with the fire marshal, building inspector, and MDE to go over the request, item by item, to determine if some items are eligible for approval. That meeting is scheduled today (Monday).

McNulty said part of the reason the district is appealing the denial of transfer is that the sprinkler system is recommended by the fire marshal and asbestos abatement will eventually be necessary, and should be allowed as part of the project.

If the MDE denies the appeal, the board would likely have to ask for voter approval to bond for the project.

There is not enough time to get such a request on the ballot for the November election, so if it chooses this option, the school board would have to approve sending the request to voters this fall, and a special election would need to be scheduled, probably in January or later, according to McNulty.

A special election would probably cost the Lester Prairie School District about $10,000, McNulty said.

Background on the transfer request

The purpose of the proposed transfer was to pay for additional work that was needed as part of the building improvement project that is underway at the school.

McNulty explained during a special board meeting July 2 that bids for the project came in $824,000 less than the construction budget for the project.

McNulty said the request to transfer $824,000 included everything that had been identified at that time. The biggest unforeseen costs involved a sprinkler system and additional asbestos abatement that was not included in the original scope of the project.

McNulty noted that the fire marshal strongly recommended the district install a sprinkler system. If the board had not agreed to install the sprinkler system, other changes to the project would have been required, and, according to McNulty, those changes could have increased costs and caused delays in the project.

Some of the asbestos abatement that was needed was not discovered until the project was started, McNulty noted. For example, once workers started work on the kitchen area, they discovered two additional ceilings above the one that was visible, and the third ceiling required abatement.

McNulty said it is possible that some of the asbestos abatement could have waited, but doing it during the current project saved the district a significant amount of money.

He noted that by doing it now, the district was able to have about 10 rooms in the east wing abated for a total cost of $42,000 to $44,000. In comparison, the district spent $8,000 to $10,000 last year to have just one room abated.

The uncertainty regarding the building project will delay the district’s final audit until January, McNulty said.

Board tours school

Following the meeting, board and staff members toured the school to view progress on the improvement project.

Board members expressed satisfaction with the improvements, and with the appearance of the painting that has been done by volunteers.

Odds and ends

In other business, the board:

• expressed appreciation for volunteers who have helped move furniture or paint the school this summer.

• heard from Principal Jeremy Schmidt that the district has purchased 25 used iMac computers from the Dassel-Cokato School District to replace old eMac computers. Schmidt said purchasing the used computers will save the district $16,000 to $20,000 compared to purchasing new computers.

• heard the district is implementing the Aesop online substitute program, which will simplify the process for finding substitute teachers. Substitutes who have worked for the district in the past will be notified and invited to register.

• approved Kelli Machemehl as junior high volleyball coach. Board Member Gregg Machemehl abstained.

• approved hiring teachers Karen Nali (Spanish), Alexandra Edlund (elementary), and Sarah Wojciechowski (elementary).

• approved the resignation of Trent Grams (elementary teacher and coach).

• approved extracurricular contracts for Ashley Neaton (C-squad volleyball), and David Rue (elementary and high school choir performance).

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