Morenci board of education approves deficit budget 2015.07.08


Morenci Board of Education members voted 5-1 to adopt a deficit budget that will use up nearly half of the fund balance. Similar action a year from now would move the district into deficit and a possible takeover by the state. Board member Laura Spencer opposed the deficit spending plan following the annual budget hearing June 30.

State legislators approved a school funding plan that gives Morenci an increase of only 0.4 percent or $20,252 based on estimated enrollment. That increase from the state represents only three-tenths of one percent of the total budget.

State support from the past year gave the district a base payment of $7,126 for each student, but extra funding through other programs brought the total to $7,361. For the next school year, the base increases to $7,391 but all the extras are gone, leading to a net increase of only $30 per student despite rising costs.

A major change in education funding moves $462 million from K-12 school support to community colleges and universities, explained Morenci superintendent Mike McAran. That money formerly came from the state's general fund. That equates to $310 per K-12 pupil or $209,000 based on Morenci's enrollment.

Morenci is receiving approval from the state for a one-time carryover of funds exceeding 15 percent that will be used for academic improvement, said finance director Erica Metcalf. 

In the past, McAran said, the district has used a lot of paraprofessionals to work with pupils needing extra help. Now the emphasis is on three special teachers to address deficiencies. Angela Pickett was hired last year to work with students and staff on reading improvements, helping children better learn how to read and comprehend. Christine Grondin focuses on improvements in mathematics and Phil Grime works with elementary school students on science concepts.

After her success in helping to raise reading scores in the younger grades in the past school year, Pickett will now work with teachers from the elementary school through the high school.

Secondary principal Kim Irish will broaden her scope to oversee the science and math curriculum from the third grade up. Elementary principal Gail Frey will spend more of her time assisting Pickett with the reading program.

"We know we have to continue to raise scores," McAran said, "and we know at the same time that we have to shore ourselves economically."

Scores have fallen for five years, McAran said, and little was done about it.

"The problem perpetuates itself and it has to get solved," he said. "The longer it goes on, the more difficult it becomes."

"It's almost like it becomes acceptable as it continues," Metcalf added.

The shortfall in funding last year was $83,000. For the next year, the shortfall grows to $150,000. That figure could drop through the completion of salary negotiations. The board is asking for a 10 percent cut for all staff members.

"We are now tied into what's called the 'early warning legislation' which kicks off Aug. 7," McAran said, and this will result in additional paperwork to keep state budget officials apprised of the district's financial status.

Cuts of $140,000 were already made for the new budget, and without that, McAran said, the district would be on the edge of becoming a "deficit district" that requires the creation of a deficit elimination plan. If the plan isn't accepted in Lansing, state officials step in to take control.

The long-range forecast suggests an additional $150,000 shortfall the following year, but a fund balance of only $135,000 to start the year.

Features of the budget include:

• Opening a second Great Start classroom for four year olds.

• Expanding Project Lead the Way (a science-based program) into the high school.

• Continuing use of the Northwest Educational Association testing program to obtain data on each student three times a year.

• Continuing the breakfast program along with an after-school snack option. The program is paid with the fund balance from the food service.

Capital projects from the bond project include:

• Upgrading the obsolete fire alarm system and tying it together between the middle school and high school offices.

• Installing a water softener system to help the heating system work more efficiently.

• Installing stadium seating outdoors that is ADA compliant.

• Replacing two buses and two vans. The vans are used to transport special education students.

• Upgrading science labs.

DEBT RETIREMENT—After Morenci's bond measure passed, state law changed to require an annual mandatory loan repayment figure. This will force the local millage to increase from 7.72 mills to 8.24 mills. Property values rose some this year—the first increase since 2010—but the district is still playing catch-up for the years of decline, Metcalf said.

LOAN—The annual cash flow loan to cover expenses until state funding arrives will increase by $50,000 to $850,000. This, in turn, leads to increased costs for paying back the loan.

CHANGES—The district's financial situation could change after completion of the annual audit this month and it could change again in the fall when enrollment figures are known. Administrators will get an idea of how many students enrolled on the first day of school Sept. 8, but the official count day doesn't arrive until Oct. 7.

OVERALL—McAran said that board member Laura Spencer, who has served as a chief financial officer for two companies, considers Metcalf's budget report to be very credible.

"That's one of the better compliments I've heard a financial officer get from a board member," he said. "I think the board is realizing they're getting very good information. Erica presents very complicated information in a simplistic format so people can understand it."

Board members understand how complicated school financing is, McAran said.