Serious discussion over what to do about Boyne City Public Schools’ increased expenses and revenue shortfall prompted a likely mid-year budget amendment at this week’s school board meeting on Jan. 9. (Results were not available by press time.)
The Boyne City Public Schools Finance Committee met on Tuesday Feb. 3 to discuss the $382,000 the school will need to take from its general fund—a move which would put the school nearly $115,000 over budget.
“If we spend the full $382,000, we will be less than 10 percent—we will be at 8.8,” said Boyne City Public Schools Business Manager Irene Byrne. “If you recall board policy, it’s to maintain a 10 percent fund balance… If we come in at the end of the year below 10 percent, the policy says that we have … three years to work ourselves out of it. I know we don’t want to take that long.”
Byrne added, “That’s the big discussion for today: what are our options? I think, on Monday night (Feb. 9), you know, the budget is the budget. These are the expenses and the revenues. We need to pass this thing.”
The finance committee then discussed how it could make $115,000 worth of cuts in order to remain in line with its own policy, but Boyne City Public Schools Superintendent Peter Moss cautioned the group as to how it proceeded.
“Do you cut a kindergarten position? Is that the way we go?,” he said. “So, you’re gonna take 80 kids and redistribute them among teachers. Those are the things that get you that kind of cash.”
Moss added, “Kids need math classes. They need special ed classes.”
Finance committee members asked where else they could make cuts. Byrne said 90 percent of the cost is in staffing—teachers, aides, custodians, bus drivers, etc.
“Our fiduciary responsibility is to pass this,” said Byrne. “I know it’s at less than 10 percent. If you want to put a disclaimer on that with some direction, that’s fine. But, if this is not passed, we’re in jeopardy if I over-expense in a category.”
Finance committee member Ken Schrader reminded the committee that shoring shortfalls is the purpose of a rainy day fund.
“This is not like we’re going broke, either,” he said. “We’re spending down our fund balance.”
At its most recent audit, the school system had a fund balance of $1,153,758.
Its appropriated expenses are $13,069,551, of which $382,000 will have to be taken from the fund balance.
“This is projected but I will caution: there’s no leeway,” said Byrne. “I mean, I’m coming in within $5,000-$10,000 on a $13 million budget.”
Byrne said if a moratorium was placed on spending right then, the school system would only save $10,000 because almost everything is already purchased for this year.
Field trip expenses were also discussed. Byrne said the costs are “very small” and come from outside sources.
According to Byrne, last June’s adopted budget was based on 1,306 students. The school system currently has 1,327 students, though Byrne said that number is expected to decrease by a couple students.
Boyne’s school system gets a per pupil allowance of $7,243 per full-time enrolled student, which is a $50 increase from the year before.
“The main reason that the local sources (revenue) went up some is that we hosted districts here for football (and) we are gonna host the basketball districts, so there is added revenue there but there is also offset of expenses,” said Byrne. “So, overall, the FTE (per pupil allowance) count going up there is additional revenue of about $140,000.”
Byrne said at-risk funding decreased by nearly $20,000.
The district’s revenue went from approximately $12.4 million to $12.6 million. However, that uptick in funds is being offset by expenses including a $100,000 transfer in to purchase a bus and a copy machine for the high school, in addition to other expenses.
“The other reason for a large jump in revenue is we had a ‘147D’ categorical that we didn’t even know of July 1 (2014) and that was a retirement categorical, so it was an $85,000 revenue as well as an $85,000 expense,” she said. “That was just a flow-through.”
Byrne cautioned that it appears at a glance that the school system’s funding increased dramatically but those increases were all offset by expenses.
“We based this budget, when we began the year, at 56.5 FTEs per teacher—again, we had those late retirements—and so now, after we have … decided to fill those positions … this budget is based on 58.37 FTEs,” Byrne said… “As you know, we decided to stay with an 80/20 on insurance, so that is now in here. All our open enrollment changes are in here. I can’t tell you off the cuff how many changes were in open enrollment but we did have more full families than we did last year—so, this is an added cost.”
Byrne said there is an increase, this year, in property tax payers who are having their tax burdens lowered through the Board of Review. The school system will have its local property tax revenue temporarily reduced and delayed when someone’s taxes are lowered, but the State of Michigan reimburses local school districts for any decrease in related funding.
Boyne schools are also facing an increase in maintenance costs due to retirement costs and the power outage last spring. However, the school was reimbursed for the outage related expenses by its insurance company.
Bus maintenance costs have also been higher than normal this year, with a 16 percent increase.
Finance committee members discussed how the upcoming May election will affect local school districts as there is a ballot proposal which could change how school districts receive some of their funding.
“If it’s passed, supposedly it will be an extra $300,000 million to the School Aid Fund,” said Moss. “However, there’s about a $400,000 million shortfall in the general fund. And, so, they’re saying that there’s a possibility that they could decide to shift (the funds.)”
Moss said the measure, which is aimed at changing how road funding is paid for, may not mean any additional revenue for schools, or it could mean a $250 per student increase.
Byrne said the school system is going to have a tough spring for some additional reasons.
“We have some added costs that we know are going into next year’s budget because our USF funds have changed,” she said… “So, we no longer will have a discounted telephone bill. No longer have a discounted cellular bill. No longer discounted e-mail accounts for all these student iPads.”
Byrne added, “So, there’s some hefty costs going on next year’s (budget.)”
Byrne said the one potential bright spot for next year is that Boyne City Public Schools is the lowest funded school district in the state. And, if any increases are made to the per pupil fund allowance, Boyne schools would receive an increase.
Ultimately, the finance committee decided to recommend to the full board on Monday to adopt the budget amendment and look to fix the fund balance issue in next year’s budget.
“I just think if we made any kind of major shifts in personnel, programming in February or March or whenever, I think we’d have hell to pay for it,” said Moss. “Especially because a lot of folks still have trouble understanding a 10 percent fund equity.”
Look for an update on this story in the Wednesday Feb. 18 edition of the Boyne City Gazette.