Wednesday, May 27, 2009

May Meetings

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).

Sobering facts.

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.


Nick said...

I can not believe this. It really amazes me that we had a surplus of money just under a year ago and now we are looking at a deficit. The fact that the income tax was lowered for the past levy seems to be the problem...what would the projection look like it it wasn't lowered?

I was a student at SHS just a few years ago when we had all those budget cuts in 2004. We worked hard to get those levies passed. Since then the schools have not brought back everything that was originally cut. During the campaign I had always said that no matter what the levy, if the school needed funding I would support it. Needless to say, this past November, I did not vote yes...why? Because I feel that, if you have the money you need to continue to bring back old programs and if not that, atleast pay the current teachers fairly for the extra work they must pick up due to the 2004 cuts.

Now we find our selves here just 5 years later, they a still making cuts just after lowering the income tax...go figure.


C Irmen said...

(Just an FYI: The note above was submitted by Mr. Nick Dominique - who apparently didn't read the requirement to include his name if he felt led to comment.)

C Irmen said...

School district financing is not like any other corporation or business with which you might be familiar. It is not as cut-and-dried as it would appear on the surface. A multitude of government mandated items do not always come with funding, and schools get stuck with the bill. Union requirements tie our hands on many levels. Unemployment rates, foreclosure rates, and reduction in state funding all contribute adversely to the bottom line. It is not as simple as "just put on another levy!". Our tax rates are now on par with other districts in our area. Our teachers' raises from the most recent contract agreement are greater than any other district around (even though our state ratings are the lowest of the area). Did you see that the contract is going to cost us $800,000 MORE over the next five years than the raises the board had originally offered? We offered raises based on our forecasting, but the threat of a strike convinced some people that we needed to pay whatever the union had demanded. Now we will be paying the price for that decision, which was incredibly short-sighted.
The point is that school finances are unique. While we can negotiate with suppliers and do other things to be fiscally responsible with the tax dollars we take in, there are other things over which we have no control. When those things decrease our revenues, we have to look for ways to economize.
Oh - and, for the record, there is no "extra work" being done by teachers as a result of the cuts in 2004. Union contracts do not allow for it. That is not to say that some teachers do not voluntarily decide to do some extra things - only that we do not ask them to do so (and we CAN'T ask them to do so).
In addition, there were cuts made in years past because certain things shouldn't have been there to begin with. No one promised - ever - that everything that was cut would be restored if the 1.25% income tax levy was passed.
(also, Nick - if we had not lowered the income tax levy rate this past November, it would not have passed at all - so our projections would look far worse than they do now)
Personally, I do not feel all is lost - yet. But hard decisions will need to be made this year and next year (and beyond) if we are going to keep this district going and give our kids a decent education. You simply can't say, "well - we'll increase our personnel costs [salaries] now and then pray that we can pass more levies to pay for it". That is completely backwards!
We can live within our means - as everyone should be doing at home - but we won't be able to give everyone everything that they want. We need to be honest with people and let them know how big the financial pie is, and then have them help us decide how best to divide it up. That might mean pay freezes until the economy makes a turn for the better and our revenues begin to increase.
We still don't know what the state of Ohio is going to do with school funding. . . that will be an important piece of the equation.
In the meantime, let's all recognize that this is not an easy task for anyone, but we CAN make it work if we all work together as a team.