Faced with a budget shortfall of more than $4 million for the 2020-21 school year, the league last fall imposed “COVID fees” on its 500 member schools on top of anticipated increases to dues and membership fees. (Star Tribune file/The Minnesota Star Tribune)

In its first in-person meeting in more than 15 months, the Minnesota State High School League's board of directors Tuesday approved a second year of increased membership dues and fees assessed to its member schools amid signs that the league's once-dire financial situation is looking up.

The league is seeking to generate just under $3.9 million for the 2021-22 school year from increased dues and fees. That figure was originally expected to be $4.5 million, but was reduced because the league is anticipating forgiveness of a $621,000 federal Paycheck Protection Program (PPP) loan.

The league's first PPP loan, taken out last spring after the pandemic shut down high school sports, was forgiven, helping the league project a net income of about $730,000 for this year.

"We still have some unknowns. We're not done yet," said league associate director Rich Matter, the league's point person for finance. "We've still got June and July to get through yet."

Faced with a budget shortfall of more than $4 million for the 2020-21 school year, the league last fall imposed "COVID fees" on its 500 member schools on top of anticipated increases to dues and membership fees. In some cases the increases amounted to nearly 300%.

Adding another year of high-dollar fees is intended to help the league shift its budget funding to a more sustainable model, leaning strongly on its member schools for funding rather than relying primarily on state tournament revenue. The pandemic, which resulted in the cancelling of state tournaments last spring and this fall, exposed the volatility of that method of generating revenue.

Most high schools acquiesced to the league's funding request. According to the league's projected budget, 91% of schools have paid the required dues and fees and the league is working with the 45 remaining schools that have not fully complied. Many schools were taken aback by the amount assessed and voiced their displeasure, asking why the league didn't do more to cut expenses rather than increase fees.

"In the end, everyone has the same goal: To maintain the programs and the services of the league," Executive Director Erich Martens said. "… The goal was to continue to provide all of the activities and services and with a staff of 18 for 49 activities. It really wasn't feasible to go down to a 50-percent staff and maintain the kind of service we typically have."

Some of the state's smallest schools contended that how the fees were assessed — based largely on enrollment — hit them disproportionately hard. A financial advisory committee was brought together to address those concerns and recommended a modification to the assessment formula to ease the schools' share of the activity fee increase.

Expectations of a more normal year ahead have led the league to project that revenues will exceed expenses by as much as $1.7 million, allowing the league to "reduce future membership fees … from $3.9 million to around $2.2, 2.3 million."

The league is also hoping the loosening of COVID restrictions for state tournaments will bolster its bottom line. "We've heard out there that there's an appetite for people to get out there and watch," Matter said. "We're hoping that our paid attendance will be really positive."

Matter said the league's financial picture is "looking much more positive that a year ago and than six months ago."

In other leage business

• The league's Board approved a $9.1 million budget for the 2021-22 year, including salary increases for staff members of 2.04%. Salaries were budgeted for a 1.67% increase for the 2022-23 school year.

• With cross-country, soccer, volleyball and track and field adding classes next year, the board was briefed on some of the issues still being resolved with the state tournmament planning.

Cross-country is expected to run all three classes on the first Saturday in November, but it could become a two-day meet. Volleyball will not get an extra date at Xcel Energy Center, which remains committed to a three-day tournament. Soccer is discussing moving third-place and consolation games out of U.S. Bank Stadium to account for the extra class.

Track and field, a complicated logistical endeavor, is still searching for a host site. This year's meet will be held at St. Michael-Albertville High School.