Gov. Doug Burgum has granted State School Superintendent Kirsten Baesler’s request for an executive order that allows North Dakota’s schools to keep larger financial reserves to pay expenses from the COVID-19 pandemic.
North Dakota law now penalizes school districts that keep general fund reserves in excess of a specified benchmark. The governor’s new executive order 2020-33, issued Wednesday, says the penalty will not apply for the 2019-20 school budget year, which ends June 30.
Baesler said the order will help local school boards and administrators plan for the best ways to use federal aid that was earmarked to help school districts pay unexpected pandemic-related costs.
She said schools had also budgeted for expenses, such as professional development for teachers and student learning excursions, that were canceled, and the unspent money may put districts over the threshold.
“Rather than having our school districts try to decide swiftly and quickly how they might be able to spend those funds, we are allowing them the opportunity to ensure that they’re able to carry over those funds,” Baesler said. “The common objective was to make sure our school districts would have the funds that were necessary in order for them to do the intended purpose of educating our students.”
Baesler said local school leaders and lawmakers in the state House and Senate were consulted about the wording of the order.
Burgum called the order “a common-sense change,” saying that without it, “there may have been an incentive for people to try to spend money to get below that (threshold) before the end of the year.”
Baesler said the order also preserves school districts’ flexibility in using federal emergency aid. Many districts may want to delay using the money until the next budget year, she said.
The general fund reserve balance limit is 35 percent of each district’s actual expenditures for the school year, plus an amount that ranges from $50,000 to $100,000, depending on whether the district is part of a cooperative agreement to share academic services with another district.
For example, a district with $1 million in actual expenditures, and a cooperative agreement with another district to share a superintendent, would be able to have a reserve of up to $450,000 without penalty -- 35 percent of $1 million, plus $100,000. The same district, if it lacked a cooperative agreement, would be limited to a $400,000 reserve.