C-A Board adopts lean 2012-13 budget

FLINT TWP. — The Carman Ainsworth school board approved a $49.33 million general fund budget contingent on about $1.2 million savings from employee concessions or contract labor.

At a public budget hearing held two weeks ago, the board reviewed a proposed general fund budget of about $46.18 million in which expenses exceeded revenues by about $3.5 million. Using up an estimated $2 million fund balance to offset the difference still left a $1.5 million revenue shortfall.

That put the board in the position of making some tough financial choices for next school year including privatizing bus and custodial services.

But a review of actual spending for 2011-12 revealed a larger than projected fund balance which is reflected in the adopted budget, said then Superintendent Bill Haley, whose last day was June 30.

Expenses for the next year are now projected at $48, 97 million, assuming successful negotiation of about $1.2 million reduction in labor costs.

Declines in property tax revenues, enrollment and state aid all account for a steadily worsening financial situation in recent years. Haley noted that the district’s fund balance has dropped from about $7 million three years ago.

“We had to borrow for the first time ever $4 million from May to August,’’ said Assistant Superintendent Russ Parks, who presented the proposed budget.

Borrowing to resolve cash flow problems will become the norm from now on and will cost about $120,000, which will be invested to earn interest to help offset borrowing expenses. But it is an expenditure the district has never had before.

Retirements and some layoffs have decreased expenses and the district also is looking into privatizing non-instructional services, Parks said.

The budget is based on numerous assumptions including having a blended student enrollment count of about 4,382 students for the 2012-13 school year, an unchanged foundation allowance of $7,759, salary and benefit increases of 0 to 1.5 percent; and a property tax value decline of 10 percent.

Parks said the proposed budget also included many unknowns that will need to be adjusted in coming months.

In summing up the budget picture, Haley said district expenses have exceeded revenues for several years but has been managed with a fund balance of between $5-7 million, one-time revenue sources and other operational reductions.

“What this signals is that all those rabbits have been sprung from the hat and we need to address the structure of spending more than we are taking in,’’ he said.

The adopted budget indicates that the district will have about a one percent fund balance at the end of the next school year. That means the board has to cease the practice of overspending, Haley said.

Balancing the budget for 2012-13 and beyond will require some “gut-wrenching” decisions, he said.

Reduction plans for the coming year will be finalized after information comes in from the state legislature, he said.

Newly appointed Superintendent Steve Tunnicliff took over July 1.

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