Major budget reductions in the Osseo School District in March 2008 weren't enough to keep the district from operating in the red for the 2009-10 fiscal year.

The Osseo School District 279 School Board approved the budget for the 2009-10 school year at its Tuesday, June 16, meeting - but reflecting a deficit for the upcoming fiscal year.

The district plans to use about $3.4 million from the unreserved fund balance to make up for the projected deficit.

"We are facing tough economic times and it affected our planning of this particular budget," Assistant Superintendent Kim Riesgraf said.

According to information provided to the School Board by Riesgraf and Director of Business Services Kelly Benusa, the district has $16.8 million less revenue for the upcoming fiscal year than the 2008-2009 budget - a decrease of 8.51 percent. The primary decrease is for the one time general education reduction and fiscal stabilization component of the Federal Stimulus Act (ARRA), resulting in the revenue reduction of $13.4 million. Those funds will be replenished the following fiscal year, Riesgraf said after the meeting, as part of the general education reduction and fiscal stabilization process.

Taking the federal stimulus act component out of the equation, the district still reflected about a $3.4 million operating deficit for the 2009-10 fiscal year.

An additional area of decreased revenue for the district includes a projected decline in student enrollment resulting in $2.5 million less than the 2008-2009 budget. Also affecting the bottom line for the revenue is the removal of the one time education aid of $1.2 million that was approved by the Legislature for 2008-09, but not funded for the upcoming fiscal year. Interdistrict desegregation transportation revenue also decreased by $920,000.

District 279 has two areas of increased revenue for 2009-10: $800,000 of special education revenue and $700,000 from an endowment permanent fund transfer adjustment. Information provided to the board also indicated the expenditure budget was less than the district was projecting - which brought the anticipated operating deficit of $3.4 million for the 2009-10 fiscal year. The impact of the budget is that it reflects a projected fund balance of $20.7 million in 2009-10.

"We continue, historically, to have more expenditures than revenue," Director Dean Henke said. "Knowing the economy is in the state it's in, it becomes difficult to see deficit spending."

Henke said he was hesitant to "approve a budget with deficit spending" and had concerns about the "cycles of significant budget cuts" coming closer together.

"What we are doing doesn't feel very sustainable," he said.

In regard to the budget, Riesgraf talked about certain items being projections and unknowns at this time.

"We are trying to be careful and conservative," she said.

In response to discussion by the board regarding the budget, Superintendent Susan Hintz said they were trying to protect the classrooms.

"We have made the best decisions we can with the information we can validate," she said.

Director Kim Green told fellow board members that she wished the financial forecast was better, but "the fact we still have a fund balance of 11 percent - I'm grateful."

Prior to voting on the 2009-2010 budget, School Board Chairperson John Nelson stated the assumptions in the budget were ones approved by the board.

In other matters, the board:

HEARD a presentation regarding the Best Communities for Music Education award to the district.

APPROVED a statement of understanding between the city of Brooklyn Park and District 279 for the operation of the Zanewood Recreation Center and joint use space at Zanewood Community School.

APPROVED gifts to the district totaling $98,696.14.

APPROVED the second and final reading regarding revised policies for student discipline, protection and privacy of educational records, suspension, exclusion and expulsion and chemical use and abuse.