At the regular meeting of the Van Buren Public Schools Board of Education on February 14, Business Office consultant Mike Dixon presented a grim budget update to the board. Early projections for the 2011-2012 school year show an excess of expenses over revenues of $5,328,329.
Mr. Dixon explained the key factors driving the projected deficit. On the revenue side, an estimated drop in students from 5,582 to 5,518 would decrease revenue by $371,840. The loss of federal funding (from ARRA and Edujobs federal sources) is projected to total $1,774,213 in decreased revenue compared to the current school year.
On the expense side, rising retirement costs present a significant financial burden to the district. A projected cost increase from 20.66% of employee salary to 27.36% in retirement costs would result in a $1,900,133 increase in district expenses. In sum, expenditures are currently projected to increase by $2,793,777.
The figures presented by Mr. Dixon were projections and could be impacted by a number of factors both in the positive and negative. The most significant impact would be any new or additional State funds approved in Lansing. On the expense side, rising health care costs could elevate expense projections even higher.
Mr. Dixon warned that Lansing may not be preparing to save districts and municipalities via additional funding, but rather through taking over financial operations of entities facing big deficits. Dixon reported that 100 emergency financial managers are being trained to go into districts and municipalities.
“The Governor is pushing for roles and responsibilities of the emergency financial manager to be significantly greater than what currently exists. What I think would happen if he gets his way is the board would lose control of the budget if they adopt a deficit budget. I don’t think you want to be in a situation where somebody else is telling you what is going to happen,” Dixon said.
President Martha Toth spoke to the immense challenge this projection represents for the Board. “It took us three years to cut $5,000,000 and now we’ve got three months to do it.”
The budget predicament came to life later in the meeting when the board rejected a recommendation to add part time paraprofessionals to kindergarten classrooms at an estimated cost of $52,000 to the district (see story on page 6).
“We can’t in a responsible way do this when we have to find 5,000,000,” said Treasurer Toni Hunt in response to the task force’s recommendations aimed at improving conditions in kindergarten classrooms.
Mr. Dixon made a point to note that the district, unlike many in the state, is not in deficit right now. He closed by clearly laying out the difficult task ahead of the Board of Education indicating that they “need to cut $5,000,000 or about 10% from the current budget” for the 2011-2012 school year.