School budget shows Morenci going into deficit 2012.07.04
By DAVID GREEN
It comes as no surprise to Morenci’s school administration and board of education. They knew it was coming; it was just a matter of when.
This is the year of the deficit.
The school district finished the 2011-12 fiscal year with only about $50,000 in its fund balance. With another deficit budget in place for the next school year, there will soon be no cash reserves to carry the district through.
The budget approved by the board of education June 27 projects a deficit of nearly $325,000, however, that’s largely dependent on enrollment.
The budget is based on 720 students, said superintendent Dr. Michael Osborne, and that might be a little generous, he said. It’s consistent with student numbers at the start of the last school year, but enrollment slipped to 707 by the end of the year.
“We have huge problems to address,” Osborne said. “We’ve become lean but we have to become leaner. We’re struggling with it.”
Staff members are already taking cuts through state-ordered reductions in insurance and retirement, he said, but salaries remain the district’s greatest expenditure.
The Hudson district, where Osborne also serves as superintendent, will climb out of its deficit situation this year after the board imposed a six percent salary cut.
Osborne looks forward to meeting with a superintendent from a district with a similar enrollment to Morenci’s to compare budgets line by line. He’s hoping that both sides will learn some cost-cutting ideas from each other.
Osborne is frustrated by actions from Lansing that make the situation tougher for school districts around the state. The governor and many legislators seem to be intrigued with charter schools, while small public schools are left to struggle.
Demands continue to grow, such as the new evaluation requirement placed on principals. Osborne isn’t saying the evaluation process is bad, but there was no extra funding from the state. Principals were taken away from their regular duties with no extra administrative help to fill the gap.
General fund revenue shows a loss of $32,000 from local property taxes due to delinquent accounts and a drop of $48,000 in state funding. Federal funding will fall by $192,600 due to the end of the American Recovery and Reinvestment Act (stimulus funds).
The total drop in revenue is projected at $272,800.
Expenditures show a decrease of $206,000 in instructional expenses (layoffs and state insurance changes); a drop of $101,500 in administrative costs (no superintendent secretary, a reduction in billing from the LISD, and no early retirement payments); and a $40,000 decrease in operations and maintenance for a total cut in expenses of $452,818.
This still leaves a projected deficit of $324,837.
The food service fund remains strong with a projected balance of $119,000. A state formula allows a transfer of $25,000 to the general fund to cover administrative costs. Federal funds through the National School Lunch Program are expected to increase due to growth in the number of students qualifying for free and reduced meals.
Athletic department expenses are expected to fall by $10,000, but even with the incoming transfer of $175,000 from the general fund, athletics are projected to produce a $24,000 deficit.
The tough part about creating a budget in June, said director of finance Erica Metcalf, is that it represents “a snapshot in time.”
“So much can change so fast,” she said, “let alone waiting on state funding.”
Budgets amendments are expected when enrollment is known in the fall.
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