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Dear Northfield School District Families:

As I shared in Family Updates 15, 16, and 17, the Northfield School District has anticipated making priority-based budget reductions for the 2025-26 school year. At the Jan. 27 school board meeting, Director of Finance Val Mertesdorf presented the annual financial forecast and solidified the amount of the reduction.

Currently, the recommendation is to identify $6 million in priority-based budget reductions for the 2025-26 school year. This represents an eight percent (8%) reduction in projected expenditures. It will not be easy but it is necessary. We are asking for your help by joining one of the priority-based budget reduction teams.

Background

The school district is responding to several financial challenges, necessitating additional budget adjustments. The primary factors contributing to this recommendation are outlined below:

1. Declining Enrollment

• The decline in enrollment is incremental, with projections showing a decrease of 0.93% per year over the next six years.

• Over the past six years, Rice County birth rates have dropped by 12%, reflecting a national trend.

• The limited availability of housing is affecting families' ability to move to the area. As of Jan. 15, there were only 28 single-family homes for sale within the 178-square-mile boundaries of the school district.

• Additionally, 70% of the district's revenue relies on enrollment, meaning that fewer students will result in reduced revenue.

The graph above shows the enrollment history and projected enrollment of the Northfield School District.

2. Mandates

• Many legislative mandates lack sufficient funding or don't receive any funding at all. Examples of these mandates include summer unemployment insurance for hourly workers, an increase in the employer's share of the state’s teacher pension fund, and the employer's contribution to a new family medical leave program.

• While these mandates are well-intentioned, they impose financial burdens and reduce flexibility for school districts. The expected costs associated with these mandates are projected to exceed $1 million in the 2024-25 fiscal year.

• Unreimbursed special education costs: Despite improvements during the 2023 legislative session, the district uses approximately $4.3 million of general fund dollars each year to subsidize these mandated and morally imperative services for students with disabilities.
  
  

3. Inflation

• The state’s basic formula has not kept up with inflation. The basic formula is the state money each school receives per student. The basic formula would need to increase by $1,364 to equal its 2003 purchasing power. Another $1,364 per pupil would result in $5.7 million in revenue for the Northfield School District.

• Health insurance premiums continue to increase, resulting in a larger district contribution.

• Inflationary pressure remains on other expenditure areas, just as they do for the rest of society. For example, this year, the district’s property and liability insurance premiums increased by 26%.

The graph above shows the per pupil allowance for FY25 and the per pupil allowance, had the allowance increased by the rate of inflation each year since 2003.

Northfield is not alone. Recent articles in the Minnesota Star Tribune and on KARE 11 highlight similar financial challenges facing many districts statewide.

Financial Forecast

• You can review the financial forecast presentation slide deck here.

• You can review the financial forecast narrative document here.

• You can watch the financial forecast presentation at the Jan. 27 board meeting here.

• You can listen to my review of the forecast on KYMN radio.
  
  

Priority-based budget reduction teams

• The district will host five priority-based budget reduction teams. The teams will review expenditures for elementary (grades K-5), secondary (grades 6-12), district services, special services (including special education), and activities.
  
  

We need you to participate on a budget team! Here are the details:

• Dates: Feb. 11, 18, and 25

• Times: 6-8:30 pm

• Location: Northfield School District Offices (201 Orchard St S)
  
  

» Click here to sign up for a budget team or to nominate someone else to participate.

Responsibility for long-term fiscal health

The Northfield School District continues to be recognized for its fiscal stewardship and high-quality financial management practices. These challenging budget decisions are part of quality financial management.

While maintaining fiscal responsibility, we remain focused on achieving our vision of preparing every student for lifelong success. As always, don’t hesitate to reach out with any questions or feedback.

Sincerely,

Matt

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Matt Hillmann, Ed.D.

Superintendent

mhillmann@northfieldschools.org | 507-663-0629

• Board packets, table files, and meeting videos are located on our website.
• You can listen to Superintendent Hillmann’s update on KYMN radio.

The Northfield School District does not discriminate on the basis of sex and prohibits sex discrimination in any education program or activity that it operates, as required by Title IX, including in employment. You can learn more at: https://northfieldschools.org/about/departments/human-resources/ under the Title IX tab.