BUDGET PRESENTATION. Bay City Public Schools Finance and Budget Issues Douglas L. Newcombe MBA/ CPA Director of Finance and Accounting. Articles Throughout Michigan. BAY CITY TIMES -January 2006 Michigan needs a taxpayers’ bill of rights to create prosperity, keep its people
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Bay City Public Schools
Finance and Budget Issues
Douglas L. Newcombe
Director of Finance and Accounting
Michigan needs a taxpayers’ bill of rights to create prosperity, keep its people
Michigan public employers face staggering legacy costs
Tight budgets choke district contract talks –Holland Public Schools
Tight budget may delay kindergarten expansion – Chelsea school board: All-day program not affordable right now
Holland Public Schools -offers five options for next round of school closings —What’s your favorite color?
East Grand Rapids Schools - $600,000 school deficit projected
Allendale Public Schools
School Cuts may be unavoidable
Lost jobs, lost students - Area’s school numbers drop as families leave state:
Allegan Public Schools-Superintendent not thrilled with curriculum proposal….
Pinconning Schools considering budget cuts
Bridgeport lays off 2 teachers midyear….
Outlook for School Funding
Middle Cities Education
January 18, 2006
Tom Clay, Director of State Affairs
Citizens Research Council of Michigan
Michigan’s Recent Statistics:
to Economic Growth
THE MORE WE CORRECT THE BUDGET ISSUES FOR 2006-07 WILL HELP RESTORE FINANCIAL STABILITY IN FUTURE YEARS AND AVOID MORE REDUCTIONS IN THE LONG-TERM.
1%-2% MIMIMUM IN 2006-2007 AND THIS MUST BE BUILT UP OVER THE NEXT SEVERAL YEARS.
EXAMPLE: DISTRICT HAS MADE OVER $17 MILLION IN REDUCTIONS THE PAST FOUR YEARS TO OFFSET INCREASING COMPENSATION COSTS. UNLESS STATE FUNDING DRASITCALLY IMPROVES, THE DISTRICT WILL CONTINUE REDUCING PROGRAMS AND SERVICES IN THE FUTURE.
CURRENTLY ADDITIONAL 16.34% COST ON PAYROLL. DISTRICT SPENDS:
ANTICIPATED FOR 2006-2007 IS A 18%-19% RATE.
TOTAL INCREASE: 85.16%
% OF PAYROLL
% INCREASE IN RATE SINCE
2001-2002 = 56%
WHAT DOES THIS MEAN?
STUDENT COUNT WILL CONTINUE TO DECREASE SIGNIFICANTLYBECAUSE OF LOWER BIRTH RATES, SCHOOLS OF CHOICE, AND ECONOMIC CONDITIONS.
LOSS OF REVENUE AT $6,875 PER STUDENT= $4.9 MILLION EACH YEAR.
HOW DOES THIS LOSS IMPACT THE BUDGET?
Funding in 2004-2005:
$6,700 x 9,846 =$65,968,200
Funding in 2005-2006:
$6,875 x 9,586 = $65,903,750
2005-06 Funding is actually less by = $ 64,450
WHAT DOES IT MEAN FOR US:$6,875
= $2,475 DIFFERENCE
DIVIDED BY 11 YEARS
= $225 PER YEAR AVERAGE
TO KEEP PACE WITH COMPENSATION COSTS, STATE FUNDING WOULD HAVE TO INCREASE AN AVERAGE OF $400 PER YEAR.
THAT WOULD MEAN - $400 EACH YEAR
x 11 YEARS
WOULD MEAN THE FOUNDATION GRANT WOULD HAVE TO BE:
$4,400 FOR 1994 -1995
+ $4,400 ADDITION NEEDED
= $8,800 FOR 2005 - 2006
THAT WOULD BE AN ADDITIONAL $18 MILLION IN REVENUE AND WE HAVE CUT $17 MILLION FROM THE BUDGET.
UNLESS SOMETHING CHANGES DRASTICALLY, SCHOOL DISTRICTS SHOULD NOT EXPECT ANY MEANINGFUL HELP FROM THE STATE TO HELP EITHER WITH HIGHER, MORE EQUITABLE FUNDING OR COST CONTAINMENT.
GIVEN THAT THE STATE’S ECONOMIC HEALTH HAS BEEN AND WILLCONTINUE TO BE BAD IN THE FORESEEABLE FUTURE, SCHOOL DISTRICTSCANNOT CUT THEIR WAY OUT OF THIS PROBLEM ONE YEAR AT A TIME.
REVENUE LOSS WITH $100 PER PUPIL MORE BUT 286 LESS STUDENTS $1,900,000
COST OF HEALTH, STEPS, RETIREMENT $3,300,000
ENERGY/FUEL COST INCREASE $ 350,000
ADJUST FOR 2005-06 SAVINGS FROM PROPERTY SALE $ 100,000
RETIREMENT/SEVERANCE $ 100,000
SUBTOTAL --------------------------- $5,750,000
NEW FINGERPRINTING REQUIREMENTS $ 70,000
NEW H.S. GRADUATION REQUIRE $ 80,000
INCREASE NEEDED FOR REPLACEMENT OF COMPUTERS $ 250,000
RESTORE 25% OF TEACHING SUPPLIES $ 250,000
RESTORE COUNSELING AND LIBRARY SERVICES $ 250,000
RESTORE 1% FUND BALANCE $ 750,000
TOTAL --------------------------------- $7,400,000
Options for Budget Reductions for 2006-07 – Draft One February 13, 2006