Royal Oak

District awaits state action to cover $800K cost

By Chris Jackett
C & G Staff Writer

ROYAL OAK — The school district recently passed its fiscal budget for the new school year but is awaiting promised action from the state to see whether an $800,000 gap will remain.

The final 2011-12 amended budget, which was also approved by the Royal Oak Neighborhood Schools Board of Education June 28, ended with a general fund deficit of nearly $358,000. That knocks the fund equity balance down to almost $9 million with a general fund budget of $56.47 million.

If a smaller 2012-13 projected general fund budget holds true, decreased expenses of $55.13 million will result in a $2.09 million deficit, reducing the equity balance to $6.92 million by June 30, 2013.

“The big factor in the expense assumptions right now is a retirement cost increase,” said Rick West, district executive director of business/finance. “Senate Bill 1040 is still left out there. The Legislature did go on break prior to finishing that piece of legislation, therefore we are assuming that the retirement rate will go from 24.46 percent to 27.37 percent for next year. That equates to a cost increase for Royal Oak schools of $800,000.”

The $800,000 accounts for 38.3 percent of the projected 2012-13 deficit. However, Superintendent Shawn Lewis-Lakin said he still expects the Legislature to come through with a bill that would erase that sizeable portion of the deficit.

“I had lunch today with Sen. (John) Pappageorge to drive home the fact that we were adopting a budget tonight that had a $800,000 hole in it that should not be there because of the commitment that the Legislature made to get reform done by June 30,” Lewis-Lakin told the board June 28. “He assured me that the Senate would, when it reconvened in July, tackle this and get it done.”

West said the impact of the current situation would affect districts statewide.

“As of 2013-14, the expected rate without reform is 31 percent,” West said. “That means 31 cents on every dollar on the payroll is going to go toward retirement. That is significant and is going to cost districts — not only Royal Oak — a significant amount of money each year.”

Other features of the new budget include an identical foundation allowance of $8,608 per student as was received in 2011-12, but the student count is down 71 to 5,100 students districtwide.

The cost to implement full-day kindergarten will also be about $700,000, but the district will save $1.4 million in healthcare costs due to Public Act 152. The district is also working on negotiating new contracts with its two largest collective bargaining groups to help offset a 5.2 percent budget cut implemented by the state in 2011.

One change West said students and parents could look forward to is the possibility of new lunch menus in the fall.

“There are no increase in the meal prices for next school year, the 2012-13 school year,” West said. “We are able to maintain those prices within our given budget and we continue to focus on healthy choices. I believe our food service and chef are working this summer to update the menu.”

For more information on the budget, visit www.royaloakschools.com.
 

You can reach C & G Staff Writer Chris Jackett at cjackett@candgnews.com or at (586)279-1110.