The school board held two meetings in May. We scheduled a "special meeting" on May 13th to discuss our updated 5 yr. forecast and our regular meeting was on May 19th.
The numbers on our 5 yr. forecast are not good. With the economy in our country and our state going further down, daily, and the unemployment rates and foreclosure rates skyrocketing in our two counties, it is not a pretty picture. Estimates for next year on foreclosures are worse than this year.
Our Treasurer, Cheryl Swisher, gave all in attendance a copy of the current spreadsheet. If you were not there, and would like a copy, please give her a call. Here are the areas you should observe closely:
Line item 4.50 is "Total Expenditures". Did you know that the state requires every school district to have a minimum of 20-25% of this line item held in reserve? When a district's reserve dips below that minimum, it is officially declared to be in "Fiscal Caution". Our district was in this situation a few years ago.
Line item 6.01 is "Excess of Revenue & Other Financing Sources over(under) Expenditures..." and this is the line where you begin to see deficit spending show up. (for those of you without an accounting degree, "deficit spending" is when you are paying out more than you are taking in - kind of what happens to some folks' personal checkbooks from time to time)
Line item 7.02 is "Case Balance June 30". This is where you will see the amounts of our carryover. At the end of fiscal year 2008, our carryover was $7.3 million. Following that line over, you will see how the deficit spending numbers above slowly eat away at the carryover until it disappears completely by 2013.
Without addressing our deficit spending, our district will be in "Fiscal Caution" by fiscal year 2012.
The projected deficit spending amount for fiscal year 2010 is just under $342,000.
The projected deficit spending amount for fiscal year 2011 is slightly over $2 million.
The projected deficit spending amount for fiscal year 2012 is slightly over $3.2 million, and the carryover now shows $2.7 million - less than the 20% of projected expenditures for that fiscal year required by the state (which means we are in "fiscal caution").
The projected deficit spending amount for fiscal year 2013 is almost $4.5 million - and that huge carryover that we had in 2008 is now completely gone, and line 7.02 shows a negative number
( -$1,711,627 to be exact).
Thankfully, our levy passed last November so at least we can count on a revenue stream for a few years. Trying to pass a levy in troubled economic times is virtually impossible, as other districts around us who waited are discovering. Of course, our levy can only collect on those who are able to pay - 0% of no income is $0 to the district, just as foreclosure on homes and property means less property tax coming into the district.
The school board looked ahead and recognized that the general election ballot of November 2008 was our best chance of having a levy pass - and it barely squeaked by (losing in Swanton and Swancreek townships and passing in the Village).
Our income is thus set as best it can be - and now our only recourse is to rein in expenses.
Did you realize that the SEA (teachers') contract that was passed last year will cost the district around $800,000 more over the next five years than the contract we originally offered them? (and that amount only gets larger as time goes by)
One of the items on our May 19th agenda was to look at ways to address the projected deficit spending for next year. Superintendent Paulette Baz brought us a long list of proposed cuts in staffing to make up for the projected $342,000 deficit. We spent a l-o-o-o-n-g time in executive session, hammering out what we thought we could cut and still give our kids a good education in the Swanton system.
It was not an easy task.
Some things were beyond our control. For example, classroom enrollment dictates that we remove a kindergarten teacher because the numbers aren't there to allow us to keep her. It is the nature of union contracts to require people with the least amount of seniority to be let go when cuts are made in staffing, no matter how great the new person might be. Now - if our kindergarten enrollment increases this summer to the proper levels, we can hire a kindergarten teacher, but the good one we had to let go might already have another job elsewhere.
How discouraging for new teachers!
We looked at high school staffing levels, custodians, library aides, etc. - nothing was held back as we looked for ways to cut our spending.
Finally, we voted to eliminate the kindergarten position (as described above) and one custodian position. Two other jobs (a library aide and middle school math teacher) will not be replaced when the current holders of these jobs retire/leave.
Eliminating these 4 positions only covers less than half of the projected deficit spending amount, but still saves the elementary PE teacher and does not cause any high school level changes. It does cut down on library time for our elementary kids - unless the regular teachers are willing to take their students to the library themselves. (which they are allowed to do)
As board member Dennins Heban commented, unless our economy makes a dramatic turnaround, the school board will be forced to make further reductions next year to keep the doors open.
Why am I sharing this grim news with you? Because this is an election year - there will be 3 school board positions on the ballot in November. Whoever decides to run for these positions will need a steel spine to make some difficult decisions next year when they take office.
They will also need to have a good grasp of finances and accounting skills. Only a thorough understanding of long-range forecasting will help them make sound financial decisions for the district.
Let's face it. If we can't make these difficult decisions, the state will step in to do it for us. I am certain no one wants that to happen!
We all must work together for the good of our kids' education and the future of our district.