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Posted: 03/06/13

Deficit projected for
RCS's 2013-14 budget

by CHRIS GRAY
Observer Staff Writer

      If projections are correct and no changes are made to spending, the Romeo Community Schools district will find itself in a deficit in 2013-14.
       Budget projections presented to the Board of Education on March 4 show the district could have a deficit of $478,000 to $1.1 million in the 2013-14 school year due to a loss in state revenue and students.
       Executive Director of Business Affairs David Massoglia said after making $14.3 million in reductions over the past decade it's going to be tough for the district to make further cuts to reduce its expenses.
       "At the end of the day, you will have several difficult choices to make," he said. "Once expenditures exceed revenue, eventually you have to fix that situation."
       The district is anticipating going into the next budget year with expenditures over revenue at $1.7 million. One of the biggest chunks of lost revenue in 2013-14 comes from decreased enrollment, with the district losing an estimated 129 pupils that costs the district $958,000. With this in mind, Massoglia said the budget may call for cutting four teachers for a $300,000 savings.
       Massoglia said Governor Rick Snyder's budget proposal calls for keeping best practices in place, but reducing the amount given per pupil to $16, a decrease of $36 per pupil. Best practices calls for districts to meet seven of eight established criteria to earn the extra funding. Massoglia said he is confident the district will meet these practices.
       "We'll jump through whatever hoops we have to to get there," he said.
       On the bright side, the district could receive up to $100 per student from performance grant funds, and a continuation of $100 per pupil from MPSERS. Last year, the district received the MPSERS and $40 per pupil for the performance grant.
       In terms of expenses, health care costs are estimated to rise by 10 percent, costing the district $384,000, while capital outlay for assets like buses is set at $400,000. A wild card in the budget is any salary and step increases through negotiations. Massoglia said the projections use no increases since most contracts have yet to be settled.
       With Snyder's proposal, Massoglia said the district would be over budget by $3.5 million, which would eat up the $3 million in fund balance for a deficit of $479,000 if no reductions or new revenue are incorporated.
       A second projection shows the district overspending by $4.2 million if it loses its performance grant and revenue from the Lutheran partnership, meaning the deficit would be at $1.1 million after using up the fund balance.
       Massoglia's optimistic projection used a starting gap of $1.5 million, no cuts to best practices, a stagnant enrollment and no loss of teachers. This projection showed the district maintaining $1.6 million in its fund balance after plugging a $1.8 million hole.
       "What we will probably have to do is come up with a targeted level of fund balance reduction," he said.
       He said the district must wait for Snyder's proposals to go through legislation for firmed up numbers, but administrators will take this month to examine the budget and return with recommendations in April.
       Board President Anita Banach said the projections show the unfortunate trend of school districts coping with a loss of revenue from the state.
       "It's not really a matter of management, it's a matter of less coming in," she said.
       A budget must be adopted by June 30, 2013.