Morenci school board: $250,000 deficit projected 7.1.09

Written by David Green.

By DAVID GREEN

If you thought 2008-09 was bad for school funding, just wait until 2009-10. It’s going to get much worse, says Morenci Area Schools finance director Erica Metcalf.

Actually, 2008-09 turned out only half as bad as predicted. When Metcalf addressed the board of education a year ago, her forecast called for a deficit of $150,000. Now it looks like it will be closer to $75,000.

She credits the school staff with careful work at trying to keep expenses down.

It will take more than that to cover the projected deficit for the next school year that Metcalf pegs at $250,000.

“It’s going to be a tough year,” she told board members at the annual budget hearing. “We’re reducing our expenses but still facing a deficit. There will be a number of items where I’ll continue to ask, ‘Do we need it?’”

There are always unknowns at school budget time when districts are required to approve a budget before state aid is known, but this year brings more uncertainty than usual.

“I’ll really be trying hard to avoid mid-year cuts,” said school superintendent Kyle Griffith, “but with all these variables, we might have to make adjustments.”

The three factors he sees as most troubling are inconsistencies in state funding; stipulations tied to federal funding; and falling enrollment.

Enrollment has been in decline for most Lenawee County districts and the situation could worsen as home foreclosures increase.

Metcalf predicated the budget on 831 students, a loss of 20 from the past school year. She’s hoping the dip goes no deeper.

Metcalf told the board that reductions in state spending in the past year were mostly balanced out by more than $300,000 in federal “stimulus” funds. That will happen again in 2009-10, but with a big difference.

Federal funding generally comes with the stipulation that it can’t supplant existing services, Metcalf said. The dollars must be used to improve student instruction in a way not currently offered.

Those stipulations were waived last year, but that won’t be the case in the next year. However, the stipulations haven’t yet been made clear.

State aid is the biggest variable at this point, with the House calling for a $110 per pupil reduction and the Senate calling for $257 less. For the following year, there’s already talk of reductions greater than $400.

The district has survived on its cash reserves, Metcalf said, but with cuts that deep, the fund balance would become so small that the board would probably be forced to come up with a balanced budget.

If the district can hold the deficit to the projected $250,000 mark, $433,000 would remain in the fund balance.

Looking around the area, Griffith said Morenci is still in better shape than some districts due to the tough decisions made by the board in the past.

DEBT RETIREMENT—The growth in delinquent taxes is putting a pinch on the debt retirement fund from the middle school project, Metcalf said.

If the situation continues, the general fund would have to fill the gap or the seven mills levied would need to be increased.

JOY OF LEARNING—The Joy of Learning program (Michigan School Readiness Great Start) is projected to be cut from the state budget, Metcalf said. The program is administered by Little People’s Place in Morenci.

LOAN—The district has borrowed from the Michigan Municipal Bond Authority for the past four years, Metcalf said, and board members approved borrowing again in anticipation of state aid payments.

The loan this year will total $1.1 million, up from last year’s $950,000 note.

MAINTENANCE—Griffith reminded taxpayers that the maintenance and construction projects underway at the school this summer are funded by a levy that cannot be used for general purposes.

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