On Nov. 6 — Election Day — the St. Clair and United South Central school districts couldn’t have been more similar.

Both are tightknit schools at the heart of small, agricultural communities. Both have declining enrollments in the neighborhood of 700 to 800 students. And on that day both were attempting to pass operating referendums to make up for six-figure budget shortfalls in the coming school year.

Things changed on Nov. 7.

USC was one of 67 Minnesota school districts — out of a near-record 99 that attempted — that passed a referendum. USC’s passed 1,339-718.

St. Clair, on the other hand, did not pass its referendum. That vote was 397-350, with about 45 percent of St. Clair’s 1,658 registered voters casting ballots.

Because of the referendum, St. Clair and USC began traveling distinctly different paths on the morning of Nov. 7. While USC teachers and administrators breathed a collective sigh of relief, the work had only just begun in St. Clair.

“We walked in the day after elections and you could just feel the change in atmosphere,” said Dustin Bosshart, the principal at St. Clair High School.

When costs collide

Things are happening in St. Clair, a town of 800 just 10 minutes south of Mankato. Big things, like a new water tower and water treatment plant to replace current facilities that are now almost 100 years old. Things that will cost an estimated $2 million and will certainly affect residents’ pocketbooks.

St. Clair has a median household income of $47,000, well below the state average of more than $52,000. And with user rates already going up because of the water project, St. Clair Supt. Tom Bruels said it’s reasonable for taxpayers to be wary of measures that would raise taxes.

That, however, does not soften the school’s responsibility to adjust a 2008-09 budget projected to have a deficit of about $300,000. With that kind of a shortfall, cuts and reductions are unavoidable.

“The burden is on us now to ensure financial stability,” Bruels said. “Around Christmas, we’ll start to look at where things can be cut. ... We’ll go through the budget line item by line item and look at the reductions that can be made with the least amount of impact.”

Bruels said the process is long. Discussions haven’t even begun yet on what programs or activities are on the chopping block. All that is certain is something will have to be done.

Bosshart said even though final decisions are still months away, “Rumors are already flying.”

Deloris Smestad is a special education teacher who has been with the school district for 20 years. She said most of the teachers try not to worry about budget cuts. But she also said teachers recognize the reality: Staff are often among the first to be cut.

“We have a large part of our elementary staff that is nearing retirement,” Smestad said. “So, we’d like to keep some of our young teachers to be leaders tomorrow. But that’s getting really difficult.”

Stability ability

The USC School District is centered in Wells and includes Bricelyn, Easton, Freeborn, Kiester and Walters. None of the communities are any too affluent and all of them are inextricably tied to the miles of rolling farm land that cover south central Minnesota.

Passing USC’s five-year, $360 per pupil referendum was not easy for the voters, said Supt. Bob Stuerman. On property valued at $100,000, the actual tax burden amounted to a yearly increase of about $120.

Stuerman said district residents are aging. Fewer young people are coming through USC’s doors. In Wells, the average household size (2.3) and the percentage of family households (64) are both below state averages.

“This district is all farms and agriculture,” Stuerman said. “We have smaller amounts of industry. ... We were really pleased when all of our precincts passed the referendum. That was definitely a good sign.”

The referendum should generate about $300,000 for the school district. Couple that with the savings from closing Kiester’s middle school, and Stuerman said USC will be a in a fairly unique position among rural schools.

“With the savings from closing Kiester and the referendum,” he said, “we should be able to continue current operations and maybe bring some programs back.”

Stuerman said the first priority is to maintain the district’s educational programming. But on the short list for possible programs to bring back are: middle school art and family and consumer science electives. Stuerman also said USC may once again give school funding to the cheerleading team, which is currently run by volunteers.

“I was not aware there was a possibility cheerleading might be brought back,” said Sue Vee, one of two moms who volunteered to coach the team. “If (USC) could provide a program for the rest of the girls coming up, that would be wonderful.”

Temporary solutions

Referendums, however, are only a temporary stopgap in the shifting tide of educational funding.

The majority of state funding comes through per pupil funding. Minnesota’s base amount is about $5,100 per student. But those per pupil allowances are weighted. A high school student who takes more expensive classes and utilizes more expensive resources receives thousands of dollars more in state funding than a kindergartner who requires fewer resources.

Imagine this scenario:

A class of 50 seniors — receiving $6,000 each in state aid — is replaced by a class of 49 kindergartners — receiving $4,000 in state aid. The enrollment declines by one. But the district loses $100,000 in funding. That difference can only be made up in one of two ways: budget cuts or a referendum.

“You shouldn’t need an election to maintain quality education,” Stuerman said.

All public schools are funded the same way, but such funding issues are magnified in small districts like USC and St. Clair, both of which are losing more than one student per year.

“Many rural school districts are facing declining enrollment,” said Sam Walseth, who is the director of legislative action for the Minnesota Rural Education Association. “With the state’s per pupil allowance, declining enrollment means losing revenue.”

But the problem is complicated even further by the fact that so much of a rural district’s wealth is tied up in farm land. With operating referendums, only the value of a house, garage and one acre can be taxed. For a district like USC — which has $424 million of its total taxable market value of $612 million tied up in agricultural land — that means much of its tax base is not accessible.

Combined with declining enrollments, the result is fewer families are absorbing more tax impact.

“Farm consolidation means the tax base is shared by fewer people,” Walseth said. “And the rural population is aging. Even a small referendum can be a big burden. That’s why we’re not a big fan of relying on referendums to provide core operations for a district.”

Open enrollment

Minnesota has what is called an “interdistrict/mandatory” enrollment policy, which essentially means students can attend any school they wish.

Schools with few extracurricular activities, or an outdated building or few high school electives, become less attractive to open-enrollment students. If a cash-strapped district cuts a fine arts program, it risks some of those students enrolling in a neighboring district, thus exacerbating an already declining enrollment.

“Because of open enrollment, it’s kind of become like advertising for a business — there’s competition,” Stuerman said. “There’s no equalization. And you’re left with the haves and the have-nots. That’s not fair to the students.”

Walseth said once a school loses the balance between budget, enrollment and attractive programming, it’s a challenge to regain control.

“If you have a bad budget year and you cut programs, then kids leave. Then because kids left, you have a bad budget year. You cut programs and more kids leave,” Walseth said. “It’s a downward spiral.”

Bruels and Stuerman said their districts receive more students than they lose to open enrollment. But both said they maintain a precarious grip on that balance, a grip that could well be lost in a year’s span.

“It’s become a marketing issue,” Bruels said. “If you make cuts with a negative impact on open enrollment, then you diminish your marketability.”

Fight the good fight

While St. Clair faces painful budget hurdles, USC is not out of the woods yet. Its referendum length is five years, only half of the customary referendum length. Declining enrollments are projected to continue. And farm consolidation isn’t reversing.

But nobody is giving up at USC and St. Clair. Stuerman said USC continues to be a vibrant district that counts good teachers and energetic students as its biggest assets. Bruels said he is confident the community of St. Clair will continue to support its school and that the current hardship is no indication of the future.

“I think people are concerned about the steps required to balance the budget,” Bruels said. “But I think people believe this is a temporary situation as well. The referendum loss was not a death knell for the district.”