“This is the most challenging budget I’ve ever dealt with in my 30-plus years of being a business manager,” Moum said during the board’s regular meeting.

The board gave first reading to the preliminary budget on Thursday. The final budget will be approved at an upcoming board meeting.

Declines in taxable valuation and in funding from the state have left the district with an anticipated $3.8 million deficit, said Moum. Moum said the district already had a projected budget deficit of $600,000 for the past 2016-2017 school year, so that is their starting point this year.

Estimated tax valuations in the district are down 6.88 percent from last year. Total anticipated revenues are at $99 million, down more than $3 million. Preliminary estimated total expenses are at $102.9 million, up $130,000.

Andrea Johnson/MDN John Hoeven Elementary, pictured, is the Minot school district’s newest school. It was built with funds approved by voters in an April 2014 bond election.

He said he has already incorporated cost-saving measures into his preliminary budget, such as delaying purchases of equipment and building upkeep.

Moum recommends that the board take a look at other potential cost savings over the next year, including increasing class sizes, eliminating specialty classes that have lower enrollment, many of which are advanced placement classes, and closing smaller elementary schools.

Moum also said the board could also consider levying three mills under the special reserve fund, which would generate approximately $650,000. Of that tax levy, some $325,000 could be transferred to the general fund for operating expenses in the 2017-2018 budget.

Moum told the board that the district’s interim fund is currently at $17.7 million, but is projected to be at about $13.8 million on July 1, 2018.

He said deficit spending cannot continue.

Of the preliminary budget, about 83 percent is salaries and benfits for teachers, administrators and staff.

Moum said he has tried to make cuts from the remaining 17 percent. He said the board should take advantage of attrition and avoid replacing teachers who retire or resign.

Some costs are unavoidable.

The district had to replace its language arts curriculum, which resulted in an additional $550,000 in workbooks and textbooks.

The board approved funding for “Title I Look Alike” programs at North Plains and Perkett Elementaries and at Memorial Middle School. The funding pays for reading help for kids who need it at schools that don’t receive federal Title I funding. Schools qualify for Title I funding if they have a certain percentage of students who qualify for free or reduced price lunch under income guidelines.

“”It is an incredible expense but it is a very needed expense,” said Supt. Mark Vollmer.

He said kids at schools that don’t qualify for Title I funding still need the additional reading help.

Still, those programs come at a cost. Moum estimated that three additional reading teachers for the look-a-like program at the three elementaries could cost up to $250,000. At some point, the district might have to look at whether to continue funding for those programs.

The board also approved the hiring on Thursday of a fourth fifth grade teacher this fall at Lewis and Clark Elementary, where the fifth grade is projected to have 90 students.

“That’s just too many kids,” said Vollmer.

The board was assured that air conditioning will be on in school buildings when classes start at the end of August, despite rumblings on Facebook that the district plans to turn off the air conditioning to save money.

The board also gave approval to Vollmer to pursue hiring a demographer that will give the district an updated analysis of enrollment patterns. The demographer will look at current enrollment and also at other trends in housing, rentals and employment.

Vollmer pointed out that this year’s incoming kindergarten class is expected to have 700 or more students, continuing a trend of larger elementary classes. There were 445 Minot High School graduates this past spring. Vollmer said Jim Hill Middle School is currently over capacity and Erik Ramstad Middle School is at or near capacity. The two high school campuses also face overcrowding in coming years.

“It’s not the greatest time to have this conversation, but higher enrollments need to be addressed,” said Vollmer.

Voters in the district approved a $39.5 million bond issue in April 2014 that paid for construction of John Hoeven Elementary and additions at Edison and Perkett Elementaries, as well as safety upgrades at all the schools in the district. Voters had defeated a much larger $125 million bond issue in December 2013 that would have addressed anticipated crowding at the middle and high schools.

Administrators and board members are aware that another bond issue election might not be welcomed by voters during the current financial downturn.

Moum said he budgeted about $35,000 for such a study, but “I don’t expect it to cost anywhere near that,” he said. Board member Mark Lyman said the board has “got to make good decisions, but you’ve got to make them with good data.” The board gave unanimous approval for the demographic study. The board will have to give approval for the hiring of a specific demographer and the terms of a contract at a future meeting.

Moum told board members that there are a few bright spots for upcoming budgets.

The state formula for per pupil payments relies on enrollment numbers for the previous school year, when Minot had more students. The district should therefore receive more funding from the state for the 2018-2019 school year.