Paul Durban, finance director for the Albert Lea Public School District, told a district task force the district faces a multi-year decline in enrollment that will reduce revenue because school funding is driven by adjusted pupil units (APUs) tied to average daily membership (ADM). He said the district's revenue formulas track student attendance, not seat count, and that recent end-of-year MARS data lowered projected APUs compared with July projections.

"Our expenditures are mostly salaries and benefits," Durban said, adding that staffing is the primary budget driver and "you cannot cut your way out of this" was repeated by a task-force member during the meeting. Durban outlined that the district had already reduced roughly $1.3 million two years ago and over $2 million last year, and warned that without further planning the district could face deficits in a multi-year horizon.

Durban said most revenue is set by formula at the state level and multiplied by APUs; local property-value increases shift more of the funding burden to local taxpayers without increasing APU-driven revenue. He explained that increasing the levy requires a referendum and community approval, not a unilateral board action.

Staff described the district's forecasting process: financial advisers (Ehlers) model enrollment using historic ADM data and county birth rates, and different averaging windows (four- or six-year) change projections. Durban emphasized the district was still awaiting the state's official October 1 MARS report, which will firm up APUs for budget decisions.

The district proposed a capacity study and a task force to evaluate options. Staff said the task force will gather additional data (county birth rates, peer-district case studies), develop community-engagement approaches (surveys, listening sessions), and present finance-committee targets and recommendations to the school board after audits and contract settlements are complete.

Durban noted the district currently maintains a strong fund balance and a long-term target of 12% fund balance in policy but cautioned that repeated, small cost increases (transportation, property insurance, substitute costs and specialized services) can outpace modest revenue gains and put pressure on that reserve.

Next steps: staff will post meeting materials and a high-school principal's video online, share the Hazel demographer's written report, and reconvene the task force to review audit results, finalized October 1 enrollment figures and collective recommendations before any formal board decisions.