Revenues are higher than expected and costs are even higher. Still, the financial picture at Saline Area Schools continues to be brighter after a gloomy start to the decade.
Saline Area Schools Assistant Superintendent for Finance Janice Warner presented an amended 2016-17 budget to the Board of Education on Feb. 14.
Warner said the district should take in about $1,262,173 more than planned. Total revenues are now budgeted at $58,833,458. She cited additional Act 18 funds and state funding for retirement as the primary reasons for the increase.
The increased revenue comes despite a lower student count in the district. The district was down 40 students, and that means the district received $300,000 less in state funding.
Superintendent Scot Graden said the district is graduating large senior classes. Last year the district graduated 450 students. The new kindergarten class brought in about 330 students. The district uses “schools of choice” students from other districts to minimize the loss.
“That’s a big number for us, to try and close that gap every summer,” Graden said.
While the difference between 12th grade and kindergarten is stark, Warner noted the district is growing in all but two grades levels.
On the other side of the ledger, the district is expected to spend $1,533,785 more than planned. Total expenditures are now pegged at $58,728,098. One of the primary reasons for the increase is that the district budgeted to hired five teachers but instead hired 12, which cost the district an additional $480,000. The amended budget also reflects labor cost increases as a result of the new contracts with the teachers and support staff unions.
While costs rose faster than revenues, the district is still budgeting for a surplus of $105,360. If the numbers hold the district’s fund balance would rise to $3,288,468, which is about 5.6 percent of the general fund expenditures.
Board policy calls for the district to carry a fund balance of at least 5 percent of general fund expenditures. In 2011-12, it dropped to 2.3 percent.
Warner said a healthy fund balance is important for cash flow.
“Last year we borrowed $3.5 million for cash flow. This year we were able to drop that down to $2.5 million. But that still costs us around $30,000 for interest and fees. It would be better spent in the classrooms,” Warner said.
Warner noted the fund balance would cover about a month of payroll in the district.
Looking ahead to next year’s budget, Warner said Gov. Snyder’s budget appears favorable for K-12 schools. She anticipates the district will see state funding rise by $50 to $80-per-pupil, which would mean $260,000 to $400,000.
There may also be additional funding for at-risk students. Snyder is also proposing to increase funding by $50/student for high school students, raising an additional $90,000.
On the flipside, the MPSERS retirement rate would increase from 24.94 to 25.56 percent, costing the district around $200,000.
Snyder is also proposing to change the assumptions for the state’s pension costs. The state’s unfunded pension liability is more than $25 billion, Warner said, and more than $35 billion when you include health benefits.
“They’ve been assuming a return of 8 percent, which they have not been meeting. The Governor wants to roll it back to 7.5 percent for two years,” Warner said.
That likely means higher retirement costs for Saline Area Schools.
“But we never know what’s going to happen. Over the last couple years when we thought we’d get money, we didn’t. And when we didn’t think we’d get money, we did. We have to wait for it to go through the House and Senate,” Warner said.
The district has weathered difficult times over the years, Warner said, but maintained quality by focusing on the needs of students and working with the community, staff and parents.
Warner said the district continues to grow its fund balance and put away money in its capital improvement fund.
“So the next time we hit those rough patches, we have the flexibility we need,” Warner said.