By DAVID GREEN
Falling enrollment, drastic cuts in state aid, a huge increase in staff retirement rates—put together, the situation could put Morenci schools in a deficit situation next year, with all reserve funds used up.
District finance director Erica Metcalf gave board of education members an update on school finances Monday now that Gov. Rick Snyder has made his state budget final.
Although enrollment numbers can only be estimated, Metcalf is following the trend experienced here and in most Michigan school districts. She expects to see more students leave the district than move here, and she’s using the figure 721 as her guess for fall enrollment—a drop of 24 students since the official count in February.
State aid includes the $170 per pupil cut made this year and the $300 per pupil cut made for the next school year in the governor’s budget.
Those funding cuts along with the drop in enrollment equates to a loss of $338,000.
An increase in retirement rates will cost the district a sum equal to $281 per pupil, for a total drop in revenue of more than $540,000. Increases in insurance costs could result in a budget shortfall of $1.18 million for the 2011-12 school year—a figure that only grows with each succeeding year.
“That’s by far the largest deficit that we’ve faced since I’ve been here,” Metcalf said.
The shortfall equals the cost of the entire teaching staff of the middle school, with the exception of special education teachers and the half guidance counselor position.
Metcalf doesn’t yet know how it can be overcome.
The deficit will be only partially covered by cash reserves that have fallen over the past decade. In the 1997-98 school year, Morenci had a fund balance of $2.1 million. Budget shortfalls caused that amount to shrink to $823,000 in the 2009-10 school year and currently stands at $523,000.
The district has the opportunity to cancel part of the loss through two incentive programs offered by the state.
“The governor’s cuts are bad,” Metcalf said, “but Morenci has an opportunity to capture up to $200 per child back.”
The first $100 would come through a “best practices” program in which districts would be rewarded for meeting four of five requirements by June 30, 2012.
Metcalf says she isn’t ready to bank on that money because districts have yet to see the details. On the surface, Morenci will have no trouble meeting the requirements largely due to past cost-cutting moves.
The other credit—estimated at $100 per student—is tied into the Michigan Public School Employees Retirement System, but details are pending.
Both of the credits are one-time allocations for the 2011-12 school year, Metcalf said.
Although the news is bad, said Superintendent of Schools Michael Osborne, he hopes the public will develop some confidence knowing that the board knows what the issues are and is working to make changes.
“We are going to make it through this, just like this district has for years,” he said. “Our obligation is to the community, to make sure that we have a school here that’s providing the best education possible, and as the economy turns, as it always has, that we’re in a position to take advantage of it.”
RECALLS—Teachers Jamie DeVoe and Kelly Bush were called back from layoff for the fall, along with bus driver April Shaffer and cook Ronda McCaskey.