When the Northfield School Board convenes on Monday, it will face a daunting task—planning its future in light of a state budget in crisis.

While the Northfield School District is, with its rainy-day fund in the black, in good shape compared to many Minnesota school districts, the state’s $6.2 billion budget shortfall is surely going to result in painful budget changes here.

In recent years, state aid to the district has been cut dramatically.

During his campaign last fall, Gov. Mark Dayton promised to increase spending on K-12 education. But as the state’s financial woes deepen, optimism is hard to come by.

“The sense that I’m getting is that the governor’s office is sending a message that the best case scenario is that they hope not to cut education,” said Kari Nelson, chair of the Northfield School Board.

Anticipated cuts come on top of reductions in recent years, according to Northfield Superintendent Chris Richardson. Historically the state has increased its payments to school districts by 2 percent each year. But since 2007-08, the school has received a one-time 1 percent increase—in effect, a 9 percent cut, Richardson said.

At the Jan. 10 school board meeting, Richardson sketched out a strategy—a “film noir,” he said—to deal with the gloomy situation. In addition to reducing operating expenditures, he recommended initiating a process much like the one used to address the school’s deficit spending in 2005.

Compounding the problem is the fact that the state budget—and thus school aid—will not be announced until sometime in the coming weeks. All school officials can do at this point is guess, guided by the current six-year financial forecast, as to what’s in store. Any budget the board may propose could be rendered moot if the actual funding differs from estimates.

“It would be irresponsible to do anything other than plan for a reasonable worst-case scenario,” Nelson said.

A central question is whether to tap the existing fund balance, which is currently $7 million, or 20 percent of operating expenses.

“Some people would say, any time you have money in the bank you should spend it,” Richardson said.

He is not one of those people, but said he hopes the board will maintain the fund in case of emergency—or to see the district through times the legislature defers aid payments, as they have done the last three years. It could be likened to using a household emergency account to pay for living expenses when that money runs dry.

“Our accounting people will tell us is that you should have at least 16 percent, because that gives you two months of operating expenses,” Nelson said. “I feel very comfortable with the 16 percent.”

Others are not. Ray Coudret is a math teacher at the high school and president of the Northfield Education Association, the local teachers union.

“You keep a fund balance for a rainy day—and it’s pouring right now,” he said.

He hopes that some of the fund balance can be used to minimize cuts to programs, staff positions and compensation. For example, Coudret said, his health care premiums have gone up almost $3,000 over the last two years.

“That’s on top of a two-year pay freeze,” he said. “I don’t feel I’m a martyr—I love what I do. But it’s financially difficult when you work more and you’re faced with getting less."

Still, he doesn’t anticipate that contract negotiations, which begin sometime in late spring, will be especially contentious. Both Coudret and Nelson said that teachers and district officials have a good working relationship.

Still, “There’s obviously tough conversations that need to happen,” Coudret said.

Beyond how to handle the fund balance, other questions to be addressed in the budget process include how to project revenue, expenses and shortfalls in the coming years.

Richardson invited community members to consider volunteering for one of the teams that will set budget priorities for the coming academic year.