An announced cut in state aid to public schools did not come as a surprise to Clarkston school officials, but it was the impetus for some upcoming discussions on long-range budget concerns.
At the Nov. 10 school board meeting, Secretary Stephen Hyer offered a report from the finance goal committee. Ongoing budget concerns led the committee to suggest full board discussions on topics such as the non-homestead school property tax, a proposal for a building “sinking fund,” possible budget reductions and ways to make the state per-pupil foundation grant more equitable among school districts.
“We’re cutting the budget we’re already in,” Hyer said later, noting Governor Jennifer Granholm’s decision to reduce this year’s per-pupil grant by $196 if the state legislature does not come up with an alternative.
The board had already dealt with some bad budget news Oct. 13, with higher-than-projected expenses and lower-than-projected income for the 2003-2004 fiscal year. Those numbers did not count the expected state aid cut, but did anticipate a reduction in the expected cash surplus from $893,180 to $47,533.
Bruce Beamer, executive director of business and financial services, had already predicted the need to dip into the district’s undesignated fund equity, which last year increased to about 14 percent of the district’s total budget. The school board had set a goal of 15 percent, based on accountants’ recommendations for emergency preparedness.
Hyer said the fund equity will likely help cushion this year’s projected shortfall, but the long term is a concern, especially with negotiated employee contracts calling for 3- to 5-percent increases over the next two years. Officials have already noted that more than 80 percent of the district’s budget consists of staff salaries and benefits.
In addition, as construction continues on renovation and additions approved by voters earlier this year, the budget must also accommodate ongoing maintenance of new facilities.
“Once we build it, we need to maintain it,” Hyer said.
That could be helped if voters were to approve an additional property tax for a “sinking fund,” a fund reserved exclusively for special building projects. Such a fund is used by some other school districts to supplement the general fund budget.
While the district has initiated efforts to control spending over the past three years, “budget reductions” are a possibility, Hyer said, although it might be a challenge to identify programs or staff to be cut.
Hyer’s recommendation is for a full-board budget workshop “as soon as possible,” to be followed by a board-administration retreat to seek administration recommendations.
“You never like to lose $1.6 million,” he said. “There are things the board wanted to protect that maybe we can’t.”
Finally, while “equitable” state aid was a promise of the 1994 “Proposal A” legislation, local officials continue to be frustrated at the difference in the foundation grant among districts. The recent audit report showed Birmingham at $11,755 per student in 2002-2003, compared with $6,947 for Clarkston.
Granholm’s proposed foundation grant reduction would be evenly applied among districts, however.
“It doesn’t make sense that a district gets twice as much money, but gets cut the same,” Hyer said.