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Paynesville Area High School graduated 97 students last June, and these were replaced with 86 kindergarten students this fall, a loss of 11. A year after the district dropped 75 to a record low for the decade, the enrollment set a new low at 1,202.

"The only good news is we're only dropping 11," said superintendent Howard Caldwell. In 2000, the school system lost 75 students from 1999.

The 86 students in kindergarten makes it the largest kindergarten class in five years, since 89 kindergartners enrolled in 1996. This year's kindergarten class is also the second largest at Paynesville Area Elementary School, trailing just the 93-member fifth grade class.

Predicting the enrollment in the kindergarten class is hard, said Caldwell. Despite surveys and counts, the school isn't really sure of the number until students arrive on the first day of school.

Caldwell, therefore, isn't quite sure what to expect in future enrollment: will classes rebound in size to the 90-student range or will they be in the 70- to 75-student range (like the current second, third, and fourth grade classes).

Caldwell is counting on at least the 70- to 75-student range. "You've got to be conservative," said Caldwell. "You can't expect more than you're going to get."

Unless kindergarten enrollments are significantly better than that - in the 100-student range (a level that hasn't been reached since 1994) - total enrollment could continue to drop for another five years at least. While the school district used to average 100 students per class, the district this year will have 100 students in only four of 13 grades: eighth grade, tenth grade, 11th grade, and 12th grade.

All these classes will graduate in the next five years.

Next spring, the largest class in the district (119 students) will graduate. A new kindergarten class of the same size next fall would mean a loss of over 30 students.

Caldwell sees at least five more years of declining enrollment. "Then we're probably going to level off," he said. "We envision that we'll be down to 1,000 students sometime in the next five years. That would be my guess."

Budget implications Since student enrollment is the main factor in figuring state aid, the decline will continue to affect the school district's bottom line. The base formula for state aid pays schools around $4,000 per student.

High school students are worth the most in the state funding formula, counting as 1.3 pupil units. For the past seven years, the population at the high school has been the best in the district, running over 450 students from 1995-1999 before dropping the past two years.

When the small elementary classes get to the high school, their impact will be greater on the bottom line.

Funding from the state has not cushioned the drop in enrollments, said Caldwell.

Last winter, the district cut over $500,000 from its budget for 2001-02. The district still might be in statutory operating debt, which will be determined after its annual audit is completed this fall.

As one of their goals this year, the school board is considering setting a policy - maybe a formula - for figuring the amount of budget reductions needed based on the drop in enrollment.

Caldwell doubts that a formula is the best way to make budget decisions, but he knows that the school board will need to keep a close eye on the budget. "Each year you need to look at things carefully and make adjustments accordingly," he said.

"I wish we would have done more earlier," he added. "It would have been a little easier to do it then."

When enrollments started to drop, though, the district had a healthy fund balance and cuts were not made until that balance had been spent. "That was a choice the board made," said Caldwell. "They wanted to provide services until the very end, and then do something about it."

"The students who went through got the benefit of smaller class sizes," said Caldwell. "Now these students will face larger class sizes."

During the board's annual goal meeting this summer, the board discussed the need to make cuts in a more timely manner. (Making cuts with a fund balance is not an easy sell to the public, the board felt.) This prompted the discussion about a formal policy or formula for making budget cuts.

The board is also expected to pursue an excess levy this fall to generate extra revenue to help the school district operate. (Levy options were on the board's agenda for its meeting on Tuesday, Sept. 11.)

The passage of an excess levy might only make future cuts less severe, said Caldwell. "We may have to go a lot deeper without an excess levy," he said.