Public Schools of Petoskey

Budget Update and Outlook

February 2009

Why are we here?• As you know, we come out annually to discuss the

finances of the District:– October 2001 - February 2005

– February 2003 - May 2006

– September 2004 - May 2008

• We want you to be aware of the District’s financial position.

• We want your input and help.

Every Year its Gloom and Doom, yet everything seems to turn out ok.

What’s up with that?

• A budget is the financial roadmap for the District. If you don’t like the destination, you make changes so you end up where you want to be on that map.

Last Time We Met….

• May 2008 – District was looking at the State Budget proposals, with the Senate and the Governor quite far apart on how much they would send to K-12 Schools

• Many Unknown Variables: – State Aid: Gov. was recommending $7,420; We are getting

$7,316– Enrollment: We were predicting a reduction of 25 FTE; actual was

a reduction of 15.07 FTE– Health Care cost increases: Predicting 10% increase; actual

increase is 8.75%

• 08-09 Budget was unbalanced by $504,055; current revision shows the unbalance will be $215,939.

Recent State Revenue Consensus Conference

• Meeting happened on January 9, 2009 to look at the current year revenue coming in to the state, and to explore projections for the upcoming fiscal year (2009-2010).

• Representatives from industry, House and Senate Fiscal Agencies, and Treasury meet and discuss their economic outlook for the State.

• The next meeting happens in May, and it could change the State’s, and our, budgets for both this and next year, depending on what happens to the economy.

State Revenue Consensus Conference – State General Fund Budget for 2008-09

• The State’s budget from 2007-08 closed out with $457.9 millions surplus. This carries forward to this year.

• Current year (2008-09) revenue estimates were revised downward, with the State’s General Fund projected to be short $144.6 million. This includes the cuts already made by the Governor earlier this year.

• Will likely result in more State budget cuts yet this year to various departments.

State Revenue Consensus Conference – State General Fund Budget for 2009-10

• The outlook for the 2009-10 shows an imbalance of $1.3 billion between estimated revenue and appropriations.

• Estimate includes predictions of continued decline in auto sales and Big Three market share.

• Estimate does not calculate the impact of any of the Big Three declaring bankruptcy.

• Estimate does not calculate the impact of any Federal Stimulus Aid package.

State Revenue Consensus Conference – State School Aid Fund Budget for 2008-09

• The State’s budget from 2007-08 closed out with $247.1 millions surplus. This carries forward to this year.

• Current year (2008-09) revenue estimates were revised downward by $338.7 million, offset by savings from declines in student enrollment across the State.

• Net result is the School Aid Fund is likely short $38.2 million, or approximately $24 per student.

• Consensus was despite the shortfall, there would likely be no cuts this year.

State Revenue Consensus Conference – State School Aid Fund Budget for 2009-10

• The outlook for the 2009-10 shows an imbalance between $208.3 and $246.6 million between estimated revenue and appropriations.

• Estimate assumes foundation allowance remains unchanged at $7,316 per pupil for Petoskey.

• Assuming no additional revenue is found, this equates to a reduction in the foundation allowance of $131 to $155 per pupil.

Summary of Revenue Consensus Conference

• The three state fiscal agencies and the private sector analysts project a continuation of very difficult economic times for Michigan through 2009-10 and somewhat beyond.

• The projections call for continued serious decline economic decline through mid-2009, with a slowing beginning at that time.

• 2010 will bring an accelerations of the recovery throughout the year.

• Considerable economic growth will occur in 2011.

Public Schools of PetoskeyFinancial Results – 2000 through 2009

-

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

Budget Cuts - 118,309 501,118 1,051,297 902,572 1,656,516 463,289 537,621 367,355

Expenses 20,110,469 21,642,904 22,412,914 23,051,973 24,942,607 23,785,211 24,725,450 24,959,034 25,835,994

Revenue 20,481,051 21,994,165 22,601,385 23,015,419 23,407,413 24,068,184 24,620,662 24,755,150 25,620,055

Fund Balance 3,175,274 3,526,535 3,715,006 3,678,452 2,143,258 2,426,231 2,321,443 2,117,559 1,901,620

00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09

Enrollment Data 1999 thru 2012

2,000

2,050

2,100

2,150

2,200

2,250

2,300

2,350

2,400

2,450

2,500

2,550

2,600

2,650

2,700

2,750

2,800

2,850

2,900

2,950

3,000

3,050

3,100

3,150

3,200

Non-Resident

Resident

After Percent District Percent Rev to Exp.

Fiscal Year Pro-ration Change Expenditures Change Difference

01-02 6,500 8.3% 21,642,904 7.6% 0.7%

02-03 6,626 1.9% 22,412,914 3.6% -1.6%

03-04 6,626 0.0% 23,051,973 2.9% -2.9%

04-05 6,700 1.1% 24,942,607 8.2% -7.1%

05-06 6,875 2.6% 23,785,211 -4.6% 7.3%

06-07 7,085 3.1% 24,725,450 4.0% -0.9%

07-08 7,204 1.7% 24,959,034 0.9% 0.7%

08-09 7,316 1.6% 26,222,712 5.1% -3.5%

09-10 7,316 0.0% 27,338,697 4.3% -4.3%

Foundation Allowance Compared to District Expenditures

General Fund Revenue

607,069

14,491,919

50,0001,277,607

600,463

8,592,997

Property Taxes

State Sources

Local Sources

Federal Sources

ISD Transfers In

General Fund Expenditures

Supplies6.05%

Capital Outlay0.49%

Transfers Out: Athletics1.71%

Salaries51.08%

Fringes27.39%

Purchased Services13.28%

Responses for the Current Year

• Current year budget was short approximately $500,000. • In response we did the following:

– cut spending on supplies and purchased services– eliminated 2.5 FTE’s of positions– sub-contracted 2.0 FTE’s of positions– added SFX art, so we could count those students– will monitor events with Revenue Sharing Board and Voc Ed House to

determine what further actions are needed.

• We are preparing our long-range forecast, and will be sharing that, along with this budget, with the staff in the next several weeks.

• We continue to ask for your ideas for revenue enhancements and expense cutting as we build next year’s budget.

Looking Forward

• Continued State economic struggles will keep school funding increases low.

• Annual cost increases at or above State school funding increases.

• Result – Annual trimming of the budget.

• Federal Stimulus package.

• Revenue sharing board.

How To Offset Our Challenges

• In the short term, maintain high MEAP scores = more students under Schools of Choice.

• Long-Range, make ourselves the Lighthouse District of the area.

• Do what you can to support your District • Stay Positive, with yourself and with your

co-workers, neighbors, and friends.