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You are Viewing an Archived IssuePosted: 02/12/14
RCS board prepares for
$1.6M budget shortfall
by CHRIS GRAYThe Romeo Community Schools Board of Education was given a clearer picture of the deficit it will deal with for this year's budget.
Observer Staff Writer
Executive Director of Business Affairs David Massoglia presented 2013-14 budget amendments on Feb. 3, saying despite better enrollment numbers, the district is facing $1.6 million in expenses over revenue.
Massoglia said the original deficit for the district was decreased from $2.6 million due to enrollment increases. Romeo lost a total of seven students, but thanks to its shared teaching program with Lutheran High School North, gained 148 for a total blended count of 5,452. Original projections showed Romeo losing more than 100 students this year.
Even with the increase, Middle Cities, the district's enrollment projection service, is predicting a 100 student loss every year over the next four years.
"Fortunately, with our technology bond and the economy have proven to help with this trend, so we didn't experience that trend this year," Massoglia said. "We're hopeful, but the projections from Middle Cities are going in the wrong direction for us."
The increased enrollment compounds with a slight bump to foundation allowance, which went up by 1.1 percent from last year for a total of $7,568 per student. This includes a one-time payment of $222 per student.
"We're slightly below the revenue per student we had in 2006-07, and I can tell you our costs have gone up substantially since then," he said.
Revenue was reported at $49 million for this year, up from $47.1 million in 2012-13. However, Massoglia said the state is providing extra revenue to cover 4.65 percent of its retirement costs.
"Most of the increase is sending it right back to the state to cover our retirement," he said.
The retirement rate was calculated at 24.79 percent, a 1.9 percent increase from last year. Retirement is costing the district $8.1 million this year.
Since 2003, the district has slashed $14.8 million from its budget, which includes $582,500 from this year's budget from two elementary teachers, a speech teacher, a special services teacher, textbook expenses and other cuts.
Massoglia said if the district were to cut 1 percent from all employee salaries and fringe benefits, the district would see a savings of $385,917. Staffing has gone down by an estimated 31 positions since 2008.
"Over the last two or three years we're pretty flat in our staffing," he said.
A majority of the district's $48.2 million in expenses is spent on salaries and benefits, making up 84.1 percent of its expenditures. Of that, 72.5 percent is made up of teacher expenses, with the next largest being AFSCME at 9 percent. Health care costs have gone up by 4.6 percent from last year, and step increases is costing the district $650,000.
On the plus side for taxpayers, debt mills will remain at 4.05 mills even after the passing of the bus bond and gradually decline if no further bond issues are approved.
The sinking fund, which collects $1.7 million through a 1.25 millage, will be before voters in 2016. Massoglia said the fund is good for making repairs but not for a long-term makeover.
"We have deferred maintenance at our Romeo Middle School, and that may become an issue in the future," he said.
The fund balance ending in 2012-13 was $4.3 million, or 9 percent of expenditures. Given this, Massoglia said the district may need to tap its $3.5 million line of credit for cash flow purposes.
"I think we might need it as early as this month," he said.
Massoglia said budget numbers from Gov. Rick Snyder should be out soon, so once they are released he can begin projections for the 2014-15 budget. He didn't, however, need the budget to give an early prediction to the board.
"We're probably giving you more budget cut recommendations, unfortuantely, because that is where we think we need to go," he said.