2011-12Budget Review

and Statistical Summary

Ravenna Public Schools

MAY 4, 2011

Governor’s School Aid Budget Plans

Governor’s Proposal&

Information from Lansing

Governor’s Proposal 2011-12Shift of Tax Burden

• January REC State General Fund ($1.2B) shortfall• Eliminate Michigan Business Tax

($2.2 B) (($750M for Schools))• Eliminate Earned Income Credit (working poor)• Cut Higher Ed 15%• Cut Revenue Sharing to Cities and Municipalities 34% • New Corporate Tax $700M• Tax pensions $300M• Prepare 2 year budget cycle

Governor’s Proposal 2011-12Education Cuts

• Significant Cuts and Shifting Expenses to K-12(SAF Balance Sheet Handout)

• School Aid Fund estimated to begin the year with $507M• MBT Elimination reduces SAF by $750M• Funds from K-12 to pay for Higher Education $896M • Cut $470 - $773 per FTE (Muskegon County)• Other Categorical cuts Ex. Declining Enrollment, ISD’s

5%, Equalization Cuts FICA and Retirement for Center Programs, etc.

• Increase of MPSERS rate from 20.66% to 24.46% and to 27.37% in 2012-13

Other Factors

• ARRA & EduJobs Elimination $500M

• Tax Base Reductions (ACT 18)

• Contractual Obligations (Steps, Health Care, Utilities, etc.)

SHARED SACRIFICE?Proposed cuts by dept. as % of prior year:

• Dept. of Education -10.3%• School Aid - 7.3%• Agriculture - 6.5%• Civil Rights - 5.3%• Executive Office - 5.0%• Higher Education - 3.6%• State Police - 2.1%• Legislature - 1.2%• Community Health - 1.1%• Human Services - 0.8%• Energy, Labor, Econ. Growth - 0.4%

SHARED SACRIFICE (CONT.)Dept. that would see increased funding:

• Transportation +4.4%• Tech Management and Budget +3.9%• Environmental Quality +2.6%• Natural Resources +2.1%• Treasury +1.7%• Military/Veteran Affairs +1.6%• Attorney General +1.3%• Corrections +0.2%

CURRENT PROPOSED LEGISLATION

• SB 7/ HB 4172

Mandates all public employees contribute 20% toward health care*

• HB 4152

Freezes wages, steps, and benefits after expiration of contract during successor contract negotiations

• HB 4241

Totally eliminates tenure

Proposed Legislation cont.

• HB 4320Requires comprehensive performance evals for tenured teachers.

• HB 4306Mandates competitive bids for non-instructional services (Transportation, Food Service, Custodial/Maintenance, Secretaries)

• HB 4059Stops schools from using tax dollars to pay for union representatives that do not teach.

Emergency Financial Managers

• On March 16, Gov. Snyder signed into law proposed changes to the Emergency Financial Manager Law

• EFM’s will be enacted to districts who are in Financial Distress. (Deficit Districts)

• Currently there are 40+ Public School Districts in Deficit in Michigan.

• That number is projected to triple by the 2012-13 school year.

Appointed EFM’s granted responsibilities

• EFM may modify, terminate, and/or renegotiate contracts

• EFM may create an academic Educational Plan for the District

• EFM may eliminate the salary and benefits of the Superintendent and the School Board.

• EFM may eliminate the power of the Superintendent and the School Board.

• EFM may exempt the School District from collective bargaining for 5 years

What this means for Ravenna Public Schools

REVENUE AND EXPENDITURES TRENDFOR

RAVENNA PUBLIC SCHOOLS

School Year Revenue Expenditures

2004-05 $8,890,589 $9,079,396

2005-06 $9,347,979 $9,768,183

2006-07 $9,211,647 $9,337,139

2007-08 $9,906,987 $9,743,562

2008-09 $9,967,240 $9,916,582

2009-10 $9,707,029 $9,945,267

2010-11* $9,611,611 $9,977,464

((2011-12))** $8,996,507 $10,506,357

2011-12 Budget Assumptions

• FTE $7316 - $470 = $6846 ($447,320)• Reduced ACT 18 ($130,000)• Increase in utilities ($30,000)• Insurance Increase (est. 18%) ($249,314)• Student count flat 1025 students ($0)• No Changes in staffing/spending

2011-12 Budget Absolutes

• Wage Increases ($61,473)

• Retirement Increase($268,164)

• Carry over expenses 10-11($365,853)

PROPOSED BUDGET 2010 - 2012

(ESTIMATE BASED ON CURRENT INFORMATION)

2010 – 11

(December)

2011-12

(Proposed)

Difference

10/11-11/12

Revenue $9,611,611 $8,996,507 ($615,104)

Expenditures $9,997,464 $10,508,266 ($530,802)

Fund Balance

$595,460 $229,607 ($365,853)

Proj. Fund Balance

$229,607 ($1,282,152) ($1.5 mil)

BOTTOM LINE:

WE NEED TO FIND $1.2 MILLION

IN REDUCTIONS TO HAVE A ($0) FUND BALANCE

DEFICIT BUDGETS

The significant changes

• Borrowing

• State involvement

• Emergency Financial Manager

• Additional Steps a District must take

• Deficit Elimination Plans

MICHIGAN LAWS ON DEFICIT BUDGETS

State School Aid Act of 1979 (Sec. 102)• A district receiving (State) money under this act shall not

adopt or operate under a deficit budget…

• A district that adopts a current year budget that projects a deficit fund balance shall not receive state funds until an deficit reduction plan is filed and approve by MDE…

• State aid payments shall be released after MDE approves the deficit reduction plan and current fiscal year budget is balanced.

WHY DO WE NEED A FUND BALANCE?

• To deal with emergencies and provide a cushion against drastic last-minute changes

• If fall count comes in low or state funding is cut mid-year.

• A facilities emergency such as a roof repair, boiler replacement, etc.,

• The State of Michigan does not provide any State Aid Payments until October of each year. (Cash-flow)

• So we are not doing student schedules at the end of August!

REDUCTIONS:POSSIBILITIES/SUGGESTIONS

• PROGRAMS?• CLASS SIZE?• PRIVATIZATION?• CONCESSIONS?• ELECTIVES?• CONSOLIDATION?

• TRANSPORTATION?• ATHLETICS?• STAFFING• EXTRA

CURRICULARS?• LAYOFFS?

**THIS IS NOT AN ALL INCLUSIVE LIST

A Grassroots effort

WHAT YOU NEED

TO

KNOW!

The True Intent of Proposal A

• Proposal A was passed in 1994 with the promise of stable funding for all MI school districts

• The School Aid Fund (SAF) at the State level is currently estimated at a 10-11 balance of $507million

• Without shifts, projected 11-12 balance of $672million (January 2010 REC figure)

• Without shifts a $260 per pupil increase in per pupil funding for 10-11 instead of $470 cut

Key Points Regarding the State Budget:

1. The proposed per pupil reduction of $470 per pupil will be harmful to education and does not represent shared sacrifice

2. For Ravenna the proposed reductions will add up to over $875 per student for 10-11 school year

3. With the proposed cut, classrooms and programs will significantly be affected

4. The proposal will mean loss of jobs in Ravenna

5. The proposal violates the intent of Proposal A

6. The proposal threatens long-term financial stability of MI schools

State Legislators

Michigan Senate – 34th District – www.senate.mi.govGoeff Hansen

420 Farnum BuildingP.O. Box 30036

Lansing, MI 48909-7536Phone: 517-373-1635

Fax: 517-373-3300Email: SenGHansen@senate.michigan.gov

Website: www.senate.michigan.gov/gop/senators/Hansen.asp?District=34

Michigan House of Representatives – www.house.mi.gov91st District

Holly HughesN-1195 House Office Building

P.O. Box 30014Lansing, MI 48909

Phone: 517-373-3436 Toll Free: 877-633-0331Email: hollyhughes@house.mi.gov

Website: www.gophouse.com/welcome.asp?District=091

92nd DistrictMarcia Hovey-Wright

N-1196 House Office BuildingP.O. Box 30014

Lansing, MI 48909Phone: 517-373-2646 Toll Free: 877-411-3684

Fax: 517-373-9646Email: marciahoveywright@house.mi.gov

Website: http://092.housedems.com