As the Saline Area School district's Board of Ed approved the final 2018-19 and draft 2019-20 budget appropriations policies for those respective school years, officials had strong words for the ongoing deficits the Saline's school system is suffering.
"I want to make clear that I'm not comfortable with the fund balance what it is -- we're going to need to take some serious cuts this year, so this doesn't go down," said Board Vice President Heidi Pfannes, while discussing the streak of deficits that amount to nearly one-and-a-half million dollars between the three school year period spanning from the 2017-2018 school year prior to this one to the upcoming 2019-2020 school year that is currently only in draft form right now.
Support services that are projected to increase in cost from 2018-19 in the draft 2019-20 budget
- Instructional Services: $35,084
- School Administration: $98,792
- Maintenance & Operations: $292,571
- Transportation: $127,620
- District Information: $9,393
- Human Resources: $38,646
- Technology Support: $10,678
- Athletics: $69,237
- Total increases in support services programs: $682,021
Pfannes' remarks were in response to Board President Paul Hynek commenting that a one-time land sale that netted the district $808,882 "saved" the 2019-2020 budget from being in the red.
"I don't want to take that propery and say, 'Oh, that's saving our budget,'" she added. "We still need to cut that budget before we say this is okay,"
A majority of the board telegraphed early willingness to make cuts after those remarks. Board trustee Jennifer Steben said she would like to also look for new sources of revenue. Hynek and Trustee Susan Estep vocalized support for Pfannes and Steben.
Revenues increase from $63,266,551 to $65,095,423 in the projections for 2019-20, while expenses increase from $63,707,747 to $64,836,471. The current fiscal year's deficit is $441,196 in it's amended form, while the projected budget for next year has a $258,952 surplus after the land sale filled in the nearly $550,000 projected deficit.
Revenues are up on a $175 projected increase in the per pupil foundation allowance per student from Proposal A, while at the same time Saline is gaining 15 more students in the upcoming school year.
Trustee Dennis Valenti, who is also the chairperson of the board's finance committee took this week's BoE meeting to ensure that the public knows that the district passes balanced budgets early on in the process, but financial realities that push revenues down or keep them stagnant and factors that increase expenses beyond the district's control are always what the district's financiers have to scramble to address later on in the yearly budgeting process.
"We pass our budgets in June for the following year -- in June of 2017, we passed a balanced budget, and where we fell was in a deficit position for the year ended 2018 ... in June 2018 we passed a balanced budget again, based on the information at the time that said we were going to have a balanced budget," Valenti explained. "So for the last two years we've passed balanced budgets, but the information the came later has thrown us into a deficit."
Valenti said that the operations of the district and the state of funding for Saline schools are suffering from chronic structural deficits that are ongoing and need to be addressed with a broader view instead of on a mere year-to-year basis as they arise.
The district's total dollar amount in its unrestricted general fund balance, or "rainy day" fund as accountants refer to that amount of money when talking about Michigan public school finances and municipal finance in general, has been dwindling the past several years.
In 2017-18 it fell from $3,308,274 to $2,898,369 and then again to $2,457,173 in the amended budget for the current fiscal year. The projected 2019-2020 budget will see it increase to $2,716,125 thanks to the aforementioned land sale.
Without that one-time boost, the projected fund balance would have been a significantly drop to $2,166,125.
"If we continue to do this year-after-year, we're going to have a deficit," Valenti said. "The last two years we have deficits amounting to $850,000. You add that to the deficit that's coming this upcoming year of $550,000, we're at $1.4 million combined deficit over a year year period. Things have to change."
If we continue to do this year-after-year we're going to have a deficit. Our administration has taken a great deal of steps to reduce our deficit significantly from the budget that was presented to us and I'm confident that they will work throughout the year to bring this down. It's something that is being addressed, they know how to do it, they will do it, we'll make sure of it. The last two years we have deficits amounting to $850,000, you add to that the deficit that's coming this upcoming year of $550,000, we're at a $1.4 million combined combined deficit over a three year period. Things have to change."
During a budget hearing earlier in the board's meeting Tuesday evening, Assistant Superintendent Miranda Owsley shared that clearer information could come out of Lansing as early as the end of summer or possibly as late as the beginning of next year, with regard to firming up the 2019-20 fiscal year figures.
The state government is currently in the process of adopting the statewide budget for the upcoming fiscal year, within which public school funding exists as a subset of the overall state finances.
The Michigan House of Representatives budget proposal as presented included the lowest of three potential increases in per pupil foundation allowance funding, so those are the numbers that Owsley and the Saline school district's business office baked into the projected 2019-2020 budget to "be conservative until we got something" more concrete from Lansing.
"We'll look to do a very early amendment next year when those numbers are more certain," Owsley said.