FarmingtonJune 21, 2012
School budget could use $11M in fund balance
By David Wallace
C & G Staff Writer
FARMINGTON — A majority of the Farmington Public Schools Board of Education seemed to favor a budget approach different this year from the cuts made in past years.
The budget laying out the district’s 2012-13 course already might be adopted at this point, as administrators planned to ask the board to approve the budget June 19, after press time. State law requires the board to adopt its budget by June 30.
Mary Reynolds, the district’s business director, outlined some of the budget’s basics during a June 12 meeting.
“We have revenues decreasing 2.42 percent to $135.6 million, and expenditures increasing 1.13 percent to $147 million. For June 30, our projected overall fund balance is projected to be at 6.9 percent,” said Reynolds.
The school board has a policy of keeping its fund balance at approximately 8 to 12 percent of its expenditures, particularly to avoid borrowing to pay expenses. Administrators hope that the financial picture improves during the year, and the budget’s final accounting will carry it into the policy range.
“Our fund balance does allow the district the ability to avoid any knee-jerk reactions in the current economic climate. It assists with cash flow to avoid borrowing, as our payments from the state are not based on our fiscal year, but on the state’s fiscal year,” said Reynolds.
In the general fund, 87 percent of costs are salaries and benefits.
“This percentage is typical across the state for a labor-intensive business such as ours,” said Reynolds.
The three-year forecast in the budget shows that if the district made no changes going forward, the district’s general fund balance would be about $48 million in the red in three years.
“The number of students go down, all the costs go up, and you have this three-year projection you have to do. And we see in three years, the fund balance is going to be $40 million in the hole. So I guess what I’m asking is, why are we going to wait another year before we start to look at things that might have to be cut?” said Trustee Murray Kahn.
Reynolds said that unknown factors play a part.
“The state’s budget is close to being completed, and there is approximately $2 million of additional revenue that we would have from that source,” Reynolds said. Potential retirement reform also could improve the district’s budget picture.
“So our thought is, as administration understanding and acknowledging the work of the past, and really the difficult job that we had two years ago with closing school sites, redistricting our entire district, the complete changeover of staff when we reconfigured and created the five-six (schools), that we really, as administration, feel that we need another year to be able to work through a lot of those challenges,” said Reynolds.
The district is working on several program evaluations, and a new state-mandated teacher and administrator evaluation process.
Two years ago, the district cut more than $17 million from the budget.
“It was very painful, and it affected everyone at every level. We know we can do it, and will it be challenging? It will be extremely challenging to do that. But at the same time, the commitment that I think that we have to the community and to the school district at large to maintain some type of stability for this upcoming budget year, I think, is important for us, and that’s why,” said Reynolds.
“We went through some very deep and difficult cuts. We went through a massive restructuring of every level of our educational system, and we need to have some time to let that work its way into the normal day-to-day activities of all our staff, our students, our parents, everybody in the system, so that we can have some stability.
“And then I think we need to, unfortunately, be ready for some very difficult discussions as we move into next year’s budget and to the following year’s budget,” Treasurer Frank Reid said.
Trustee George Gurrola pointed out that using $11.4 million in fund balance leans toward the worst-case scenario, but the best-case scenario has revenues $6 million short of expenditures.
“That’s a lot of positions, a lot of programs, a lot of somethings, but it would be decimating (to cut),” said Gurrola.
“This is a radical change of philosophy, but I think it’s a matter of we just can’t cut any more, and there’s some hope that we won’t have to cut as deeply, so I’m supportive of the budget,” said Secretary Priscilla Brouillette.
“It seems to make sense to me to use the resources that we have available to us, preserve what we can for now and hope that things will improve to some degree, and whatever cuts we have to make in the future won’t be as extensive,” said Trustee Howard Wallach.
The budget is available for review at www.farmington.k12. mi.us and at the Schulman Administrative Center, 32500 Shiawassee.
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