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You are Viewing an Archived IssuePosted: 06/13/12
RCS 2012-13 budget
shows $2.5 million gap
by CHRIS GRAYA loss of students and increased retirement rates may cause the Romeo Community Schools Board of Education to dip into reserve funds.
Observer Staff Writer
A budget presented by administrators at the board's June 4 meeting has the district at $2.5 million in expenditures over revenue, calling for the spending of fund balance dollars to level the budget.
A public hearing on the budget will be held 6:30 p.m. Monday, June 18, at the Romeo Engineering and Technology Center. Adoption of the budget is expected to follow the hearing.
To take care of the budget gap, the district would need to dip into its $4 million fund balance. This will leave the district with $1.49 million.
David Massoglia, executive director of business affairs, cautioned the board against spending large chunks of fund balance on recurring expenditures.
"If we want to maintain our sound financial status, overspending would have to be remedied," he said.
Finding ways of reducing spending has not been easy, though. The district has cut $12.9 million from its budgets since 2003, with the latest budget calling for another $1.3 million in reductions.
Board President Anita Banach said the 2012-13 budget gap isn't due to a mismanagement of funds, but the results of receiving less revenue while expenses increase.
"We have been, over time, reducing our expenditures as much as we can," she said. "We're holding on by a thread from the state."
The largest portion comes from a loss of 115 students, equating to $848,240 in lost per-pupil foundation allowance from the state.
Retirement rates make up a large portion of the expense. An increase in the Michigan Public School Employees Retirement System (MPSERS) rate from 24.46 percent to 27.37 percent will cost the district just over $750,000.
Conversely, a one-time payment of $100 per pupil revenue will be given to the district from MPSERS, which will provide $552,024.
The retirement rate is projected to increase even further in 2013-14 to 31.21 percent, costing the district approximately $1 million.
Districts could get a reprieve, as state legislators are currently reviewing Senate Bill 1040. The bill would reform the retirement system and cause a 3.5 percent drop in the rate.
"We're still waiting on some legislation for retirement, they may change the retirement rate, but that hasn't been done yet," Massoglia said on June 4.
In relation, administrators are recommending the district switch to a 80/20 contribution method for health care, meaning 20 percent of premiums would be paid for by employees. Massoglia said this would net a savings of $1 million.
"We recommend a focus on negotiations," he said.
Trustee Terry Davis objected to the budget, disagreeing with the fact that it didn't include steps for teachers but would ask for more employee contributions.
"We don't want to keep cutting them thinking we can balance the budget of this state on their backs," he said. "If that's the answer, then all you're doing is destroying public education."
Other expenses include $425,000 for full-day kindergarten. Massoglia noted it would cost the district more in the long run to not switch since the district would lose per-pupil funding.
Although there has been no change in Romeo's foundation allowance amount, districts are still reeling from the $470 per-pupil cut that took place two years ago.
However, the state will once more award the district with an additional $52 per pupil for meeting seven of eight best practices. This would total $283,082 in revenue.
In addition, the state will give $40 per pupil in the form of a performance grant for a total of $217,775.
A balanced budget must be adopted by June 30.