Budget Workshop February 22, 2010

1. Budget Workshop February 22, 2010

2. 2010-2011 General Fund Budget The budget is a product of our strategic plan Educating and inspiring each student to navigate successfully in a global community.

3. Governor’s Budget Proposal • Funding: • Proposes no additional reductions in funding ($165 cut this year remains) • Will require approval of expansion of sales tax to services, lower rate to 5.5% to generate $550 million for SAF • Change is sales tax linked to 3-year phase out of Michigan Business Tax • Retirement Rate: • 2.47% increase to rate: 16.94% to 19.41%,14.6% increase in cost • Early retirement incentive (1.6% multiplier instead of 1.5%) • Cost to be “shared equally” by all districts • Projected cost = Increase in retirement rate of 3% starting in 2011-12 • Will be offset by employees paying additional 3% starting in October • Changes to retirement system • Elimination of dental & vision coverage for retirements after 10/1/10 • Increase employee contribution by 3% of employee’s salary • Cap years of service at 30, over 30, employer pays into defined contribution • New hybrid plan for new employees

4. Governor’s Budget Proposal • Others: • Recommendation to create budget that carries over $150 million to 2011-12 to mitigate loss of federal stabilization funds • From excess funds generated from expansion of sales tax • Additional funds for SAF will be eliminated when MBT is fully phased out (2012-13 school year) • Further promotes the consolidation of school business services, such as accounting, purchasing, and technology, to ensure public tax dollars are spent wisely.

5. Revenue assumptions: $300 decrease in per pupil funding. ($7,402) Student enrollment: Same as 2009-10 (2,997) 0% increase in taxable values Recreational millage Kent County Act 18 special education funding $50,000 decrease in IDEA (Federal special education) All other revenue equal to 2009-10 Budget Assumptions for 2010-11

6. Expense assumptions: 0% base salary increase Salary step increase included: 1.8% of total salaries Health Insurance: 18% for MESSA 10% for WMHIP Retirement Rate: 2.47% increase (actual) Utilities: 10% increase Budget Assumptions for 2010-11

7. 2010-11 Budget Projection

8. 2009-10 to 2010-11 (Most Likely)

9. Budget cuts vs. use of fund balance • 3-year plan to cushion budget cuts • Board agreed last spring to allow fund balance to drop to 8-10% by the end of 2011-12 to soften budget reductions • Target figure of $2.8 million in fund balance at end of 2011-12 • Started this year at $4,683,818 • Approximately $1.9 million of fund balance to spend over 3 years • $550,000 being used this year • What does future look like? • Flat funding, to minimal increases • Most of Lansing believes school finance issues are “cost”, not “revenue” problems • State controlled retirement rate could increase 1% per year ($150K) • Health care costs increase 10% annually on average ($300K)

10. Projected Cuts & Use of Fund Balance

11. Revenue & Expense Trends

12. East Grand Rapids Foundation Allowance • 2010-11 estimated foundation allowance includes $115 per pupil in federal stabilization funds, actual state dollars for the grant would be $7,319. State support would have increased $18 per pupil since 2004-05.

13. East Grand Rapids Foundation Allowance

14. School Aid Fund Revenues (In Billions)

15. EGR Health Care Rates – Full Family • Admin/Woodcliff Support Annual Cost as of 2/1/10: $12,840 • $1.6 million in additional annual costs since 2001-02

16. Retirement Contribution Rate Percentage Increase since 2001-02 (59.5%), equals $1,100,000 in annual additional cost based on 2009-10 salaries.

17. History of Budget Reductions&Breakdown of Operating Expenses

18. 2009-10: $775,000 $700,000 beginning of year, $75,000 2nd semester 2008-09: $270,000 2007-08: $115,000 2003-04: $1,000,000 Recent Budget Reductions

19. Budget Reductions Implemented • Staff/Program Reductions or Restructuring: • Middle School Teaming • Custodial services • Administration • Transportation • Technology • Secretarial services • Elementary and Secondary media centers • Special education programs • Gifted and talented program • Elementary Spanish • Outsourced Child Care staff • Increased our pay to participate fee for athletes. • Activity fee for non-athletic co-curricular’s • Reduced supply/textbook budgets for all departments by 35% • Reduced interest costs on annual cash flow borrowing

20. 2009-10 General Fund Budget

21. Personnel Costs Non Bargaining Support = Central Office Support, Child Care, PAC Director

22. Other Costs

23. Prior year’s reductions have tried to avoid eliminating programs and services We are a personnel business, future reductions will affect personnel, and educational programs “Less people, or less expensive people?” Follow the strategic plan Goal 5: “Maximize resources for student learning” Think creatively about how to maximize those resources Different ways of delivering services Look for synergistic opportunities to be more efficient Balancing the budget

24. Plan of action to adopt budget in June • Budget Workshop with Board of Education (February) • Official start of budget development process • Budget Committee (February – April) • Committee will provide recommendations to balance budget • Review Budget Committee recommendations (April) • Finance Committee, full Board of Education • Staff/Community Feedback (April-May) • Review Budget Committee recommendations for feedback • Make necessary adjustments to budget (May) • Actual Health care rates, staff/community feedback • Present, adopt 2010-11 budget (June)

25. 2010-11 General Fund Budget The budget is a product of our strategic plan • The mission of the East Grand Rapids Public Schools, in partnership with our parents and community, will educating and inspiring each student to navigate successfully in a global community. • When completed, with the help of our community and staff we will have a plan to operate outstanding programs within the resources available to us.

26. Questions?