2013-14 Budget Update & Budget Reduction Recommendations

1. 2013-14 Budget Update & Budget Reduction Recommendations

2. Topics of Discussion • 2013-14 Budget Projection Update & State Budget Update • Basis for recommendations & budget variables • Budget Variables that could change projection • EGR Now donations • Enrollment • Performance based funding • Negotiations • Review of budget focus groups recommendations • Proposed budget plan for 2013-14 • Structural balance • Overview of proposed budget reductions • Budget process till adoption of budget • Discussion/Questions

3. 2013-14 Budget(Original Projection) • Key Assumptions: • No increase in per-pupil funding ($7,397) • Best Practices reduced from $52 to $16 per pupil • Step Increase = 1.8% of total salaries • Retirement Rate: 24.79% • Health Care: 3.5% cap increase per PA152

4. Change to Budget Projection • Title I funding: • Title I grant is annually $80,000 to $100,000, very small compared to most districts. Based on economic demographics of student population • Grant is applied to reading and math assistance at the Middle School, which is the district’s designated Title I building • With the constraints placed on Title I funds as a result of our “focus school” designation we have been reviewing the cost/benefit of continuing to apply for the grant • Not knowing what the recommendation to the Board would be, administration conservatively assumed we would not apply for the grant, but left the related expenses in the budget • Recommendation at this point is to continue to apply for the grant • Budget projection revised to include the $100,000 in Title I revenue

5. Revised Budget Projection

6. State Budget Update • Governor, House, and Senate have all introduced school aid budgets • Governor’s Proposal: • $34 equity payment to districts at base foundation ($6,966) bringing them to $7,000. Only proposed for 2013-14 • No increase to foundation allowance for EGR ($7,397) • Continuation of MSPERS offset credit and reduced performance based funding grant • Reduction in Best Practices grant from $52/pupil to $16/pupil • Net impact for EGR: $36/pupil decrease from 2012-13($108,000)

7. State Budget Update • House Proposal: • $34 equity payment to districts at base foundation ($6,966) bringing them to $7,000. Only proposed for 2013-14 • No increase to foundation allowance for EGR ($7,397) • Continuation of MSPERS offset credit and performance based funding grant at 2012-13 level • Elimination of Best Practices grant ($52/pupil in 2012-13) • Net impact for EGR: $52/pupil decrease from 2012-13 ($156,000) • Senate Proposal: • $34 equity payment for base foundation districts plus $50/$100 increase based on 2x formula. • EGR: $89/pupil increase to foundation allowance ($7,486) • Elimination of MSPERS credit funding ($105/pupil in 2012-13) • Elimination of Best Practices grant ($52/pupil in 2012-13) • Net impact for EGR: $68/pupil decrease from 2012-13 ($204,000)

8. Basis for recommendations • Structural balance: • Recommendation based on attempting to balance the budget without further use of fund balance • District has used approximately $2 million of its fund balance the last four years including this year • Structural deficit projected to increase the next 3 years with no overall increase in funding combined with projected personnel cost increases (approx. $400,000 to $500,000 per year) • Proposed recommendations: • Will highlight at what point administration feels the district isn’t “what it wants to be as a school district” • Designed to assist Board in terms of potential use of fund balance, application of EGR Now funding

9. Budget Variables affecting projection • EGR Now donations • Final State School Aid budget • Enrollment • Current projection is 3,000 student FTE • Small senior class (210) will assist 2013-14 total • If Kindergarten/Young 5 and incremental grade growth is normal, chance to exceed 3,000 student FTE • Kindergarten enrollment growing, but still need additional enrollees • Performance funding: • State budget will probably include performance grant that we did not qualify for this year. Could potentially qualify for between $30 and $100 per pupil. • Negotiations • One year agreement(s) expires

10. Budget Focus Groups • Three focus groups ranging from 6 to 9 members: • Two staff groups • One parent group • Objectives given to focus groups: • What do we want to be as a district? • Educational program • Co-curriculars • Organizational structure • Maximum efficiency • Structurally balanced budget • Each group held three two hour sessions

11. Focus Groups Ideas to resolve budget deficit • All Three Groups: • Use of unrestricted fund balance ($500,000) • Reduction or elimination of elementary paraeducator support • Two Groups: • Administrative reductions • Food service cost efficiencies, additional revenue • Request PTA’s to partially support building budgets • Reduce high school guidance staffing • Eliminate intervention specialist position • Eliminate elementary general education social work • Eliminate elementary world language • One Group: • Partial reduction of elementary specials • Increase in pay to participate for athletics • Use of restricted fund balance for potential new programs • Negotiate a freeze of budgeted step increase • Incorporation of potential EGR NOW donations

12. Proposed Reduction Recommendations

13. Administrative Savings • Consistent with focus group recommendations, savings will approximate ½ of administrative position • Specific reduction will be determined in time for June budget hearing • Total: $65,000

14. Teacher Early Retirement Incentive • Board of Education and Teacher Association have agreed to offer an early retirement incentive program this spring • Program requires a minimum of 4 teachers to elect the incentive • Incentive is a sliding scale ranges from 25% (4 teachers) to 40% (10 or more teachers) of this year’s base salary • 2013-14 savings will be approximately same at 4 or 10 teachers • 2014-15 and beyond savings will be much greater, assisting structural balance for future years • 2013-14 Savings: $80,000

15. Athletics • Outsource non-staff coaches: $30,000 • Coaches that have no other employment through the district besides coaching would be outsourced to a third party company. Savings would be not incurring state retirement costs less third party fees. • Pay to participate increase: $50,000 • Proposal is to increase pay to participate to $250 per sport, with removal of the annual family cap. Current program is $190 per sport, with a $475 annual family cap

16. Food Service efficiencies/revenue increases • District has continued to struggle to breakeven since the consolidation with Grand Rapids. • Avoiding further deficits, or utilizing profit to offset indirect expenses would assist the General Fund budget • At current meal sales, staffing can be reduced in High School kitchen. • Meal prices have not been raised in several years • Total: $25,000

17. Reduce secretarial staffing • Staffing will be reduced by 0.5 FTE • Specific reduction will be identified at the June budget hearing • Total: $30,000

18. Eliminate elementary paraprofessional positions • Current staffing levels: • Young 5’s: 2 hours per day for half day program • Kindergarten: 2 hours per day for full day program • 1st grade: 2 hours per day • Some assistance from parent volunteers, but there will be a loss of service and flexibility for the classroom(s). • Total: $140,000

19. Reduce one section of 2nd grade • Due to projected low class sizes in next year’s 2nd grade • 3 sections currently totaling 53 students will reduced to sections • Total: $90,000

20. Eliminate intervention specialist position • Service provided at elementary and middle school levels designed to help struggling general education students • Intervention specialist position is a portion of a full time position • 0.8 FTE intervention specialist, with individual teaching one class at middle school • Service will be not be backfilled by other staff • Total: $90,000

21. Eliminate elementary world language • Full elimination of K-5 program • Middle school program will be adjusted in the future to accommodate students not having the elementary experience • Total: $270,000

22. Eliminate one high school guidance counseling position • Currently have three staff members providing guidance counseling services • Increased workload for two remaining staff members • Some services restructured or eliminated • Other responsibilities shifted to administration and the guidance secretary • Total: $120,000

23. Eliminate elementary art • Elementary students receive specials in a half day block once a week. Classroom teachers receive their weekly planning time during this half day • Students from 3 classrooms will be spread into the two remaining specials, physical education and music, during the once per week half day • Total: $180,000

24. Eliminate general education social work • Social work/counseling services at the elementary level will be reduced to only those required through special services • Total: $75,000

25. Summary of Reductions • Administrative Savings: $65,000 • Early Retirement Incentive: $80,000 • Outsource non-staff coaches: $30,000 • Increase pay to participate to $250/sport: $50,000 • Food Service staffing reduction/meal price increase: $25,000 • Reduce secretarial staffing: $30,000 • Elementary paraprofessional positions: $140,000 • Reduce one section in 2nd grade: $90,000 • Intervention Specialist position: $90,000 • Elementary world language: $270,000 • One high school guidance position: $120,000 • Elementary art: $180,000 • Elementary general education social work: $75,000 • Total: $1,245,000 Beyond the line, administration feels the district is no longer “what we want it to be”

26. Additional concepts being investigated • Offset a portion of PAC management costs: $20,000 • Researching potential for additional rental revenue, booster support of a portion of PAC management costs • Restructuring of in-house/contracted maintenance staffing/costs: TBD • Reviewing the cost benefit of in-house maintenance staff versus outside vendor support • Partnership with neighboring district to assume our transportation needs: TBD • Operational savings might not be significant • Cost avoidance for future by not having to refresh bus fleet • More reliable staffing and bus availability during peak usage

27. Revised Budget Projection Recommend eliminating remaining $183,685 through use of fund balance or compensation savings.

28. Focus Groups Ideas to resolve budget deficit • All Three Groups: • Use of unrestricted fund balance ($500,000) • Reduction or elimination of elementary paraeducator support • Two Groups: • Administrative reductions • Food service cost efficiencies, additional revenue • Request PTA’s to partially support building budgets • Reduce high school guidance staffing • Eliminate intervention specialist position • Eliminate elementary general education social work • Eliminate elementary world language • One Group: • Partial reduction of elementary specials • Increase in pay to participate for athletics • Use of restricted fund balance for potential new programs • Negotiate a freeze of budgeted step increase • Incorporation of potential EGR NOW donations Items shaded in red are included in final proposal

29. Budget Process – Remainder of year • Collective Bargaining with employee associations • Starting in late April • Monitor state budget process until state budget is adopted • Adjust budget assumptions if there are modifications from the Governor’s proposal • Monitor potential legislation in Lansing that might affect the district budget • Community & Staff discussions about budget proposal • Now through the end of May • June Budget Hearing with Board of Education • Adoption of 2013-14 budget – June Board of Ed meeting

30. Questions?