The Edina Public Schools school board voted on March 4 to borrow $800,000 next year as part of its budget. The unusual move comes as the affluent, suburban school district faces a $3.6 million budget deficit next school year.

At the end of December, the district’s finance department released a five year financial projection showing that without budget cuts, the district’s fund balance would be exhausted in the 2025-26 school year. The district would then enter statutory operating debt during the 2026-27 school year. This is the sort of dire financial projection more familiar to the State’s large urban districts, like Minneapolis and St. Paul, which are typically blamed on declining enrollment in those districts.

In a district that is lauded as one of the top school districts in Minnesota, taking out a loan to cover basic operating expenses is an unusual move. Edina Public Schools claims it is one of only three districts in Minnesota to have a “triple A” credit rating. The loan will allow the district to keep its unassigned fund balance–essentially its emergency reserves—above its board’s policy of 6% of operating expenses.

Like neighboring Minneapolis, Edina has seen the number of students living in the district enrolled in public schools decline in recent years. Edina Public Schools had about 7,500 resident students in 2014-15, according to data from the Minnesota Department of Education. The number of resident students is expected to decline to 6,800 students next year. A resident student is a student who lives in a district and attends a public school, whether it be their own school district, another school district or a charter school. Minneapolis Public Schools had about 50,718 resident students in 2014-15, which is expected to decline to about 47,700 resident students next year.

Unlike Minneapolis, Edina Public Schools has been able to maintain its total enrollment of about 8,500 students by enrolling students who live in other school districts through open enrollment. Minneapolis Public Schools has seen its enrollment decline from about 35,400 students in 2014-15 to about 28,000 this year, which has made it increasingly difficult for the district to continue to operate the same number of buildings for fewer students.

The growth in open-enrolled students attending Edina Public Schools has come in part from an increasing number of students who live in Minneapolis but enroll in Edina. The number of Minneapolis residents enrolled in Edina has increased from 478 in the 2014-15 school year to 816 students this year, according to data from the Minnesota Department of Education.

“Open enrollment allows the district to efficiently use the educational space within our system, creating the financial sustainability that allows us to maintain all of our schools and programs,”reads the Edina Public Schools website.

While declining enrollment is not a factor in Edina’s budget gap, rising costs are. In a letter to the community, Superintendent Stacie Stanley said that the loan is a temporary measure to give the district time to come up with additional revenue or explore other ways to cut costs. Stanley warns that the budget deficit will continue, and grow, unless State aid increases. She pointed to increasing costs of labor and benefits already included in the district’s contracts as the reason for the budget deficit.

The beginning of Edina Public Schools Superintendent Stacie Stanley’s letter addressing the district’s budget shortfall published in early March.

One day before its December financial projection was released, Edina Public Schools signed a new contract with its teachers’ union, Education Minnesota/Edina. The new contract included significant pay increases for some teachers. Edina teachers early in their careers will see salary increases of 10-21%, depending on the teacher’s level of education. The union contract also added a $5,000 pay increase for teachers with advanced degrees and 25 years of service and an additional $5,000 after 30 years of service.

For teachers between 12 and 25 years of service, pay was increased 3-6% with the highest increases going to educators with the highest levels of education. All teachers will receive a pay increase of 2% in the second year.

For comparison, in current negotiations Minneapolis teachers have proposed raising salaries by 8.5% in the current year, and 7.5% in the second year for all teachers. The district said this proposal would cost about $92 million. The district countered with a proposed 3% and 2% salary increase, which it estimates would cost $42 million. The district has said that any settlement made above its current offer would increase its already $110 million budget gap next year. The district and union remain in closed mediation.

Edina Public Schools told the community in January about its budget deficit, noting that wages and benefits next year will cost nearly $5 million more than the district expected. The district hosted seven listening sessions with the community to gather ideas on where to make cuts and what to prioritize. The year before, the district trimmed about $4 million in costs during its budget process. According to the district, it has had to make cuts nearly every year since 2007 and will continue to make cuts until the State funding is increased.

Edina Public Schools is moving forward with $2.8 million in budget cuts and revenue increases that include everything from cutting central office staff, raising the parking fee for high school students, raising prices on tickets for athletic events, and increasing the cost of participating in school athletics and extracurricular activities. The cuts also include eliminating one full-time school nurse and reducing media specialists by one-and-a-half full-time equivalent positions, raising class sizes to accommodate more students through open enrollment, and reducing 2.6 full-time equivalent teaching positions in elementary and middle schools.

The proposed media specialist and school nurse cuts can be avoided with the planned $800,000 loan. In an earlier proposal that the board rejected, media specialists in elementary schools would have been reduced from full to part-time. The district would have also cut up to five full-time school nurse positions.