After a couple years of "good news" budgets at Saline Area Schools, the Board of Education heard decidedly gloomy news at Tuesday's meeting. The district plans to cut staff through attrition to solidify its financial standing after running a deficit last year.
"The budget didn't go our way this year. The last couple years, things swung our way. This year, they didn't" Board President Tim Austin said.
When the board adopted final budget amendments for 2017-18, it approved a $359,128 deficit after spending $61,216,139. The deficit would have been larger if the district didn't reduce a transfer to its capital projects fund by $372,000. The year-end deficit reduces the district's fund balance to $2,949,146 - or 5.43 percent of the general fund budget.
As a result, the district is planning to tighten its belt even as state funding is rising. The district is budgeting for a $376,522 surplus after $61,139,264 in expenditures, replenishing the fund balance to $3,325,667, or 6.21 percent of the general fund budget.
Janice Warner, Assistant Superintendent for Finance, presented the budgets to the board Tuesday evening. Putting the 2017-18 budget to bed, Warner cited decreased revenues and increased expenditures. Revenue was down $114,746. Meanwhile, the district spent $116,000 more on salaries than anticipated. The big blow was a $331,000 increase in benefits. The district also spent $227,000 more than budgeted on contract staffing, supplies and other things. Local sources of revenue are expected to fall, with the district counting on less in donations. The Chinese student exchange program is ending, which will cost tuition revenue. The district also expects $496,000 less in Act 18 reimbursement.
In all, the district expects increased revenue of $658,775.
On the cost side, the district expects to save $165,000 in salary and benefits. Eight retiring teachers will be replaced by younger, cheaper teachers. The district will eliminate some jobs, including 4.5 paraeducator jobs, through attrition.
Warner emphasized there would be no layoffs.
The district also plans to pay back the capital projects fund, used to help shore this year's deficit.
The bottom line has the district taking in $61,515,000 and spending $61,139,000 for a surplus of $376,522.. That would raise the fund balance to $3,325,000 - or 6.1 percent of the budget.
Salaries and benefits comprise 87 percent of district general fund spending.
With the 2017-18 budget finalized, the district approved the 2018-19 budget. State funding of Saline Area Schools is rising $238 per-pupil, from $7,657 to $7,895. That nets the district an extra $1,213,000. The district also expects enrollment to increase by 10 students, for another $79,000 in state funding.
Saline's general fund balance, money the district can use in a pinch - has been treading water.
Despite considerable housing development in the district and a slight increase in schools of choice students enrolling next year, the district is only counting on student population to grow by 10 students. The district is graduating 430-470 students each year. Each year, the district has about 330 kindergarten students. Superintendent Scot Graden said the district must add about 100 students over the course of those 13 years to maintain flat enrollment.
Board policy dictates the fund balance must be five percent. At between 5.4 and 6.2 percent for this year and next, Saline's fund balance is about half the state average of 11.9 percent. It's less than the Washtenaw County average of 10.8 percent and far less than Chelsea's fund balance, which sits at 18.9 percent.
Several members of the board indicated Saline's fund balance should be higher.
"Our budget shows just how tight we are and shows why we need an adequate fund balance. Things can happen. Even in good times you can be hit by surprises," Valenti said.
Another issue from Tuesday's board meeting showed how Saline's low fund balance costs the district. The board approved a motion to solicit bids to borrow $4.5 million in August to meet payroll. With a higher fund balance, the board could avoid the costs associated with the short-term loan.