2010-11 budget reduction recommendations difficult financial times at the southgate community...
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2010-11 Budget Reduction RecommendationsDifficult Financial Times at the Southgate Community Schools*
The Situation:Funding from the State of Michigan is at an all time low.Beginning the 2010-11 School Year with $750,000 loss.The 2010-11 Foundation Allowance cut is anticipated to be $268 per student or nearly $1.5 Million which follows a 2009-10 cut of $165.Anticipated drop of enrollment by 100 students or $680,000Retirement rate from State increased to 19.41% for an additional $900,000 in expense. Insurance rates are expected to increase by 20% which would cost the District $800,000 more than in 2009-10.Anticipated teacher salary step increase of $530,000
Bottom Line:The Bottom Line is that the Southgate Community Schools is looking at an under-funding from the State of Michigan in the amount of: $5,160,000
(10.8% of its $47.9-Million General Fund Budget) *
Business As Usual?!?:Unfortunately, the Southgate Community Schools is not a true business yet were required to act like one!
We must stay within the budgets that are given to us.We cannot increase our prices to bolster revenues.We must work with various employee bargaining units.We must adhere to State & Federal expenditure and reporting mandates.We cannot add employees to address these mandates.We must compete with Parochial Schools, Charter Schools, & Home Schoolers that are not required to follow the same stringent requirements.*
Assumptions / Options:On Thursday, May 13th, the Board, Administration, and representatives of various bargaining groups met to discuss the Districts financial options. With considerations over a two-year time period, the following actions were addressed:
PRIVATIZATION OF CUSTODIAL MAINTENANCE SERVICEPHASE OUT OF DISTRICT-WIDE TRANSPORTATIONATHLETIC CHANGES AND INCREASED PAY-TO-PARTICIPATE FEES.REDUCTION OF TECHNOLOGY BUDGETDISTRICT-WIDE EMPLOYEE REDUCTIONS /CONCESSIONS.*
CUSTODIAL MAINTENANCE PRIVATIZATION:
The outsourcing of custodial maintenance has been discussed with the Board since last Fall with bids being received in March, 2010.
~~~~~ANTICIPATED NET RESULT:$500,000 in 2010-11 and $1.3-Million in 2011-12*
PHASE OUT DISTRICT TRANSPORTATION:
The transportation of students is considered a non-instructional optional cost to the District. The first year would eliminate transportation for high school, middle school, and athletics (one way). The second year would eliminate the balance of transportation within the District with the exception of Special Ed which is partially funded by the State of Michigan.
~~~~~ANTICIPATED NET SAVINGS:$180,000 in 2010-11 and $320,000 in 2011-12*
INCREASE ATHLETIC PAY TO PARTICIPATE RATES:
The current pay-to-participate rate saved the District nearly $90,000 in 2009-10. These proposed changes would both cut costs and increase the fees as follows:
Elimination of 7th & 8th Grade Combined TeamsIncreased pay-to-participate fees:$100 per participant$50 for reduced lunch program participants$25 for free lunch program participants.Family cap of $250
~~~~~ANTICIPATED NET SAVINGS (INCLUDES INITIAL $90,000):$130,000 in 2010-11 and $150,000 in 2011-12*
DECREASE IN TECHNOLOGY BUDGET:
With Technology costing less to procure each year, It was decided to have the Technology Budget adjusted downwards for one year to accommodate this trend. Recent bond issues along with various grants have provided an additional boost to our Technology Department. It will be tight for the Department, however, intelligent purchasing and the further utilization of existing technology should help the District through the rough 2010-11 school year. ~~~~~ANTICIPATED NET SAVINGS:$300,000 in 2010-11*
MAJOR CUTS THUS FAR:
The above cuts are deep and severe, however, when added together they result in a net projected savings of: ANTICIPATED NET REDUCTION:2010-11: $1,110,0002011-12: $1,770,000PROJECTED SHORT FALL BALANCE OF:2010-11: $4,050,0002011-12: ???*
DEFICIT REDUCTION PLAN
Michigan Law states that School Districts must maintain a Zero or Greater balance on their school budget or file a Deficit Reduction Plan with the State. The good news is that this plan allows the school district 2-3 years to bring their deficit up to that level. The bad news is that theres a lot of work and sacrifice that must be made to balance these books.The goal the Finance Committee recommends for the 2010-11 School Year is that the District wipe out all but $1.6-Million of the $5.16-Million deficit in the first year. For the Southgate Schools to meet that objective, we must decrease expenses by an additional $2.45-Million beyond the changes noted earlier. So how are we going to achieve that? ~~~~~ THROUGH DISTRICT-WIDE EMPLOYEE REDUCTIONS & CONCESSIONS*
Where Does the Money Go?84% of the Districts Budget goes toward salary related expenses, which is where were going to have to begin:*
Salaries, Benefits, & Contract Labor40,521,800Everything Else7,473,600TOTAL BUDGET47,995,400
THE SIMPLE SOLUTION
The school financial crisis has been occurring for 3-4 years now, however, the cuts have been primarily out of the Everything Else portion of the budget. This year, we need to address the 84% of the budget allocated for salaries, benefits, and contract labor!
The Simple Solution is to prorate the $2.45-Million over every salary/benefit in the District, however, this is not a simple matter. Since Technology, Maintenance, and Transportation are already taking their individual hits, we need a more versatile solution.
How are the Salaries Divided?District salaries are divided up as follows, with the bulk (80%) being for Instruction and/or Instructional Support.
Similar to the idea of a direct cost reduction proration to salaries & benefits, a more equitable solution would be to prorate the $2.45-Million over all of the Southgate Community Schools bargaining and non-affiliated units. This proration will allow each unit to make decisions within their ranks to deal with the costs through attrition (ie; retirement), benefit reductions, layoffs, step freezes or decreases, or other quantifiable means necessary to meet the cost reduction goals. *
THE NET RESULT
Unfortunately, ALL school districts in Michigan are facing these types of tough decisions, some more than others. The Southgate Community Schools family must work together to get through these difficult times. Were in a better position than most as were not forced to close schools and are attractive enough to entice students from bordering districts to come learn with us. We must continue to build on this success and work on strategies that can help us through these tough times and make the District viable for a LONG time! *